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anonymous
 5 years ago
The beautiful, mythical country of Coloradial uses the teo as its currency, and the gritty, postindustrial country of Oheo uses the eren. Exactly one year ago you could get 100 teos in exchange for 5 erens in the foreign exchange market. Since then, though, the real interest rate in Coloradial has increased, while staying constant in Oheo.
One year ago, you borrowed 100,000 teos from a Coloradial bank at a rate of 3% per year. You then traded the 100,000 teos for erens at the nominal exchange rate which prevailed at the time (100 teos = 5 erens), and invested those erens in Oheo at 5% in
anonymous
 5 years ago
The beautiful, mythical country of Coloradial uses the teo as its currency, and the gritty, postindustrial country of Oheo uses the eren. Exactly one year ago you could get 100 teos in exchange for 5 erens in the foreign exchange market. Since then, though, the real interest rate in Coloradial has increased, while staying constant in Oheo. One year ago, you borrowed 100,000 teos from a Coloradial bank at a rate of 3% per year. You then traded the 100,000 teos for erens at the nominal exchange rate which prevailed at the time (100 teos = 5 erens), and invested those erens in Oheo at 5% in

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anonymous
 5 years ago
Best ResponseYou've already chosen the best response.0Does the question have an ending? I think I know where it's going.
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