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(4) Assume that the comparable interest rates in UK and US are 12% and 5% respectively. Given that the spot rate is $ 1.6/,
(4) Assume that the comparable interest rates in UK and US are 12% and 5% respectively. Given that the spot rate is $ 1.6/, (a) what would be the one-year forward exchange rate? (consider the US as a home currency). (b) Do you expect the funds to flow from US to UK due to the interest rate differentials? Why?
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Advanced Accounting
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng
11th edition
538480289, 978-0538480284
