Question
Assume that annual interest rates in the United States are 2 percent, while interest rates in France are 5 percent. a. According to IRP, what
Assume that annual interest rates in the United States are 2 percent, while interest rates in France are 5 percent.
a. According to IRP, what should the forward rate premium or discount of the euro be? Round your answer to two decimal places. Enter your answer as a positive value.
b. If the euro's spot rate is $1.26, what should the one-year forward rate of the euro be? Do not round intermediate calculations. Round your answer to three decimal places.
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Financial Modeling
Authors: Simon Benninga
4th Edition
0262027283, 9780262027281
