If inflation rate of both countries is given in per year .. And spot rate after 6 months is asked ..do we have to divide the rates by 2 and then use it in the formula ?
Ques 25 of 2016 sep/dec exam is asking which one is correct .. Why 2nd option “in a weak form efficiency market, share price reacts to new info the day after it is announced” is also not correct ?
Second question: The share price will react to new information, but there is no reason whatsoever that it should happen exactly one day after it is announced 🙂