Question
The current rates are:(1) Spot exchange rate: $2.00/; (2) 90-day USD denominated bonds: 2% (8% annual); (3) 90-day UK pound denominated bonds: 4% (16% annual);
- The current rates are:(1) Spot exchange rate: $2.00/;
(2) 90-day USD denominated bonds: 2% (8% annual);
(3) 90-day UK pound denominated bonds: 4% (16% annual);
(4) Current 90 day forward exchange rate: $1.98/
c. If CIP were to hold, and the only thing that could change is the foreign exchange rate, to what value will it be driven?
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Business Forecasting
Authors: John E. Hanke, Dean Wichern
9th edition
132301202, 978-0132301206
