The spot exchange rate today for the number of Danish Krona (DKK) per Swiss Franc (SFR) is 7.60 DKK = 1 SFR. The annualised Danish LIBOR interest-rate (for the six month period starting today) is 7%. The annualised Swiss LIBOR interest-rate (for the six month period starting today) is 3%. Assume six months is exactly 0.5 year.

Q 2: What is the six month forward rate for the Danish Krona (DKK) per Swiss Franc (SFR). Give your answer correct to four decimal places.

Q 3: Suppose the theory that the Forward Rate is an Unbiased Predictor of the Future Spot Rate holds. What is the unbiased prediction of the spot exchange rate (Danish Krona (DKK) per Swiss Franc (SFR)) in six months time.