[Ifeoma]

Thank you John.

One more question:

Can the concept of lock-in rate as learned under foreign exchange be applied to interest rate in order to get the Effective Interest Rate?

[Ifeoma]

Hello John,

I have watched the lecture on lock-in rate.

Which of the figures represents each approach i.e. between 0.01 and 0.02 (basis), represents the expired basis and which is the unexpired basis?

Thank you

[Ifeoma]

I don’t seem to quite understand this.

Going by the interest rate parity formula which is S’ = S° * (1+If)/(1+Ih)

I would have thought that the solution should be 1.412*1.02/1.05

Given that interest rate in the foreign country (If) is 2% and the interest rate in the home country (Ih) is 5%. Applying this gives me a final answer – $6,858,285.71.

Kindly clarify.

[Ifeoma]

Dear Tutor,

A review of the question below gives the answer as (A) – Not efficient at all. Could you please explain the rationale behind this. I would have thought the answer should be Weak form efficient – B

Gurdip plots the historic movements of share prices and uses this analysis to make her investment decisions.

To what extent does Gurdip believe capital markets to be efficient?
A Not efficient at all
B Weak form efficient
C Semi-strong form efficient
D Strong form efficient

[Author]

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