Question
**SHOW YOUR WORK** The 6-month U. S. T-bills have a nominal rate of 8%, while the default-free German bonds that mature in 6 months have
**SHOW YOUR WORK**
The 6-month U. S. T-bills have a nominal rate of 8%, while the default-free German bonds that mature in 6 months have a nominal rate of 6%. In the spot exchange market, one euro equals $0.70.
a If interest rate parity holds, what is the 6-month forward exchange rate?
b How many U. S. dollars would you receive for every euro exchanged in 6 months?
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Fundamentals Of Futures And Options Markets
Authors: Jonn C. Hull
8th International Edition
0133382850, 9780133382853
