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Current interest rates are iS=4%,i=6%. Expected interest rates next year are: iS=7%;i=3%. Expected spot rate in two years is S2($/)=1.09. Use the asset market approach
Current interest rates are iS=4%,i=6%. Expected interest rates next year are: iS=7%;i=3%. Expected spot rate in two years is S2($/)=1.09. Use the asset market approach to compute the current spot rate So(\$/). Please just type in the number without the currency signs. For example, if your answer is $1.25/, then type in 1.25 as your final answer. Please keep at least 2 decimal numbers (up to 5 decimal numbers)
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