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Suppose that the six-month interest rate is 5.0 percent p.a. in the United States and 4.5 percent p.a. in euro zone, and the six-month forward
Suppose that the six-month interest rate is 5.0 percent p.a. in the United States and 4.5 percent p.a. in euro zone, and the six-month forward exchange rate is $1.16/. What must the spot exchange rate be? Assume CIRP holds and ignore the transaction cost. None of the other answers $1.1572/6 $1.1545/ $1.1656/ $1.1628/6
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