Question
Assume a risk-free asset in the U.S. is currently yielding 2.7 percent while a New Zealand risk-free asset is yielding 2.8 percent and the current
Assume a risk-free asset in the U.S. is currently yielding 2.7 percent while a New Zealand risk-free asset is yielding 2.8 percent and the current
spot rate is NZD0.8829 = $1. What is the approximate 6-month forward rate if interest rate parity holds?
Complete the following table.
| US Rf rate % | NZ Rf rate % | Spot Rate NZD=1USD | 6 month forward rate |
| 2.7 | 2.8 | 0.8829 | 0. |
| 2.5 | 2.8 | 0.8829 |
|
| 2.9 | 2.8 | 0.8829 |
|
| 2.8 | 2.7 | 0.8829 |
|
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International Finance Theory And Policy
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J Melitz,
11th Edition
013451954X, 9780134519548
