Help on MCQForums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Help on MCQThis topic has 3 replies, 2 voices, and was last updated 9 years ago by John Moffat.Viewing 4 posts - 1 through 4 (of 4 total)AuthorPosts May 22, 2015 at 10:16 am #247904 olaniyiMemberTopics: 10Replies: 20☆The current exchange rate for US $ against the £ is $/£ 1.84. Inflation in the U.S. is 5% p.a whereas it is 4% in the UK. What would you expect the exchange rate to be in two years time, given the above information? May 22, 2015 at 11:33 am #247925 John MoffatKeymasterTopics: 57Replies: 54628☆☆☆☆☆You use the purchasing power parity formula on the formula sheet.The rate in 2 years time = 1.84 x (1.05/1.04)^2 = 1.88(I do suggest that you watch the free lectures. I go through exactly the same example in the lecture on forecasting exchange rates!) May 22, 2015 at 12:10 pm #247933 olaniyiMemberTopics: 10Replies: 20☆Thank you sir May 22, 2015 at 1:11 pm #247946 John MoffatKeymasterTopics: 57Replies: 54628☆☆☆☆☆You are welcome 🙂AuthorPostsViewing 4 posts - 1 through 4 (of 4 total)You must be logged in to reply to this topic.Log In Username: Password: Keep me signed in Log In