Good evening sir!
in this question, they have given inflation rates individually for years 1-5 and the present inflation rate (year 0)
so, my logic was that since we are given the present inflation rates, that will mean that by the start of year 1, the exhchange rate would have risen by the present inflation rates.
however, the answer uses rates OF THAT YEAR to get the exchange rate.
can u explain as to why my logic is incorrect?
thank u
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Mock 2, Q1, BPP: Novoroast plc
9y ago#1The start of the first year is now - time 0.
Time 1 is the end of the first year and so the exchange rate will have changed according to the inflation rates in the first year,
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