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Interest rate in a certain Norwegian Krone denominated debt security is 7.12% compounded annually. The current spot exchange rate is NK9.0000/$ and the U.S. dollar
Interest rate in a certain Norwegian Krone denominated debt security is 7.12% compounded annually. The current spot exchange rate is NK9.0000/$ and the U.S. dollar is expected to appreciate by 4% in one year. If the international parity condition holds, how many percent should the interest rate on a similar U.S. dollar denominated debt security be? (Note: Use the exact method in your calculations of the parity condition). Round your answer to one decimal place
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