00:01
Here you have to answer what's going on with countries currency whether it appreciates or depreciates.
00:10
Here let's start with a formula which dictates the expected depreciation for currency so let's say that is expected depreciation and here we can write down the formula for this expected values so that is the difference between the interest 3%, minus 5%, plus the absolute value of the change in risk premium.
00:48
So basically here, this absolute value becomes lower since the risk of default false.
01:11
And now let's write down the final formula.
01:13
That's negative 1 % plus the absolute value of deletero.
01:20
And here basically the answer will depend on the magnitude of this delta row.
01:33
So here you have to so here the negative 1 % is a factor for appreciation while the deletero or basically lower risk premium is a factor for depreciation.
02:04
And keeping this in mind, let's answer the question.
02:11
So, here, in question a, have to determine whether that is conclusive, whether we can conclude what's going on with currency, and the answer is, the effect is non -conclusive or inconclusive, hence the value of viltroup is unknown.
02:48
And here i have to answer what's going on if it appreciates by more than 1 % by more or less than 1%...