International fisher effect


Problem:

Nominal annual interest rates in Cyprus are 5%. The spot rate for the Cyprus pound (CYP) is $1.50 and the Cyprus pound is expected to adjust to a future spot rate (one year from today) of $1.53.

Requirement:

Question: According to the international Fisher effect (IFE),what is the nominal interest rate in the United States?

Note: Please show basic calculation

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Accounting Basics: International fisher effect
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