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Do all please Q1. Suppose the spot rate between the dollar and the euro is 1.08 $/. The dollar can be borrowed for one year
Do all please
Q1. Suppose the spot rate between the dollar and the euro is 1.08 $/. The dollar can be borrowed for one year at 1.75 per cent, and the euro can be lent for one year at 3.25 per cent.
(a) Determine the forward premium.
(b) Calculate the one-year forward rate.
(iii) Drawing on the information in question Q1, suppose the maturity period is six months instead of one year.
(a) Calculate the forward premium or discount.
b) Determine the forward rate
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