Question
Today's GBP/USD spot rate is, X0USD/GBP= 1.28. Assume that rGBP= 7%and rUSD= 4%, if the 1-Year USD/GBP forward rate is F1USD/GBP= 1.30, according to the
Today's GBP/USD spot rate is, X0USD/GBP= 1.28. Assume that rGBP= 7%and rUSD= 4%, if the 1-Year USD/GBP forward rate is F1USD/GBP= 1.30, according to the Covered Interest Rate parity (CIRP), is the GBP underpriced/overpriced in the actual forward contract?
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Financial Management For Decision Makers
Authors: Peter Atrill
7th Edition
129201606X, 978-1292016061
