Expenditures Assignment | Homework For You
October 19th, 2019
- Interview two people and survey what type of expenditures they had in their household for the past three months to “maintain a standard of living”
- From the survey results select ten products you wish to include in your basket of goods. What are the products you picked and why?
- What is the price for each product in Australia and where did you obtain the price?
- What is the price for each product in Canada and where did you obtain the price?
- Evaluate the concept of ‘Law of One Price’ by observing the actual spot rate and comparing it with the implied PPP exchange rate. Discuss possible practical issues that could have impacted the implied PPP exchange rate.
2) Exchange rate prediction
- Explain how you collected the data for the prediction model and what issues you considered in selecting the data.
- What is your regression model (expressed as an equation) including the resulting coefficients.
- Provide a prediction for the expected CAD/AUD spot exchange rate at 31 December 2019.
- Does a covered arbitrage opportunity exist in CAD/AUD if you use the forward FX quotes table above for CAD/USD and USD/AUD to calculate the cross rates? If so, what would be the profit?
Assume that you can freely borrow and invest in AUD, CAD, or USD using the central bank interest rates (cash rate for AU, target for the overnight rate for CA, the lower bound of the target range of the federal funds rate for US)
- Discuss ways you can test the performance of your model and ways to improve the performance of your model.
3) Report Structure
Your report should be structured in a professional manner, free from grammatical errors and include a References list. Get Economics homework help today