Question
Suppose the New Zealand interest rate is equal to 8% per year and the U.S. interest rate is equal to 10% per year . For
Suppose the New Zealand interest rate is equal to 8% per year and the U.S. interest rate is equal to 10% per year. For the interest rate parity condition to hold it must be the case that
a. The NZD sells at a 3-month forward discount of about .005 relative to the USD.
b. The NZD sells at a 3-month forward premium of about .005 relative to the USD.
c. The NZD sells at a 3-month forward discount of about .018 relative to the USD.
d. The NZD sells at a 3-month forward premium of about .018 relative to the USD.
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Investment Analysis and Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown
10th Edition
538482109, 1133711774, 538482389, 9780538482103, 9781133711773, 978-0538482387
