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Assume the current U.S. dollar-British spot rate is 0.6927/$. If the current nominal one-year interest rate in the U.S. is 5% and the comparable rate
Assume the current U.S. dollar-British spot rate is 0.6927£/$. If the current nominal one-year interest rate in the U.S. is 5% and the comparable rate in Britain is 6%, what is the approximate forward exchange rate for 360 days?
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SOLUTION To calculate the forward exchange rate we need to use the following formula Forward Rate Spot Rate x 1 Interest Rate of Domestic Currency 1 I...
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Corporate Financial Management
Authors: Glen Arnold
5th edition
978-1292178066, 129217806X, 273758837, 978-0273758839
