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Suppose the spot and six-month forward rates on the South Korean won are SKW 1,304.89 and SKW 1,315.00, respectively. The annual risk-free rate in the

Suppose the spot and six-month forward rates on the South Korean won are SKW 1,304.89 and SKW 1,315.00, respectively. The annual risk-free rate in the United States is 5 percent, and the annual risk-free rate in South Korea is 7 percent.

What must the six-month forward rate be to prevent arbitrage?

Forward rate SKW

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