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Problem 21-10 Exchange Rates and Arbitrage [LO2] Suppose the spot and six-month forward rates on the Norwegian krone are Kr 5.85 and Kr 6.00, respectively.
Problem 21-10 Exchange Rates and Arbitrage [LO2] Suppose the spot and six-month forward rates on the Norwegian krone are Kr 5.85 and Kr 6.00, respectively. The annual risk-free rate in the United States is 3.65 percent, and the annual risk-free rate in Norway is 5.35 percent. Using the approximation, the six-month forward rate on the Norwegian krone would have to be Kr'S to prevent arbitrage. (Do not round intermediate calculations. Round your answer to 4 decimal places, e.g., 32.1616.)
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