Question
James Clark is a foreign exchange trader with Citibank. He notices the following quotes. __________________________________________________________________________________________________ Spot exchange rateUSD1.2051/SFr Six-month forward exchange rateUSD1.1922/SFr Six-month $ interest
James Clark is a foreign exchange trader with Citibank. He notices the following quotes.
__________________________________________________________________________________________________
Spot exchange rateUSD1.2051/SFr
Six-month forward exchange rateUSD1.1922/SFr
Six-month $ interest rate8% per year
Six-month SFr interest rate10% per year
___________________________________________________________________________________________________
Is the interest rate parity holding? You may ignore transaction costs.
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Basic Finance An Introduction to Financial Institutions, Investments and Management
Authors: Herbert B. Mayo
11th Edition
1285425790, 1285425795, 9781305464988 , 978-1285425795
