Question
Assume that the Mexican peso exhibits a 6-month interest rate of 6.5 percent, while the UAE dirham exhibits a 6-month interest rate of 4 percent.
Assume that the Mexican peso exhibits a 6-month interest rate of 6.5 percent, while the UAE dirham exhibits a 6-month interest rate of 4 percent. From a UAE investors perspective, the UAE dirham is the home currency.
(1). Calculate, according to IRP, the forward rate premium of the peso with respect to the UAE dirham and
(ii) calculate that the 6-month forward rate. Assume pesos spot rate is 0.18 dirham.
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Financial Management In The Public Sector Tools Applications And Cases
Authors: Xiaohu Wang
2nd Edition
0765625229, 9780765625229
