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A what is the uks inflation rate if the equilibrium

Suppose $1.25/£ and the 1-year forward rate is $1.20/£. The real interest rate on a risk-free government security is 2 percent in both the United Kingdom and the United States. The US inflation rate is 5 percent.

a. What is the UK's inflation rate if the equilibrium relationships hold?

b. What is the UK's nominal required return on risk-free government securities?

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Finance Basics: A what is the uks inflation rate if the equilibrium

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