Question
Assume that interest rate parity holds and that 90-day risk-free securities yield a nominal annual rate of 3% in the United States and a nominal
Assume that interest rate parity holds and that 90-day risk-free securities yield a nominal annual rate of 3% in the United States and a nominal annual rate of 3.8% in the United Kingdom. In the spot market, 1 pound = $1.3.
What is the 90-day forward rate? Do not round intermediate calculations. Round your answer to the four decimal places.
$
Is the 90-day forward rate trading at a premium or a discount relative to the spot rate?
-Select-PremiumDiscount
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Personal Financial Planning
Authors: Lawrence J. Gitman, Michael D. Joehnk
11th Edition
0324422865, 978-0324422863
