60-day interest rate (simple, p.a.) are 3% at home (usd) and 4% abroad (eur). The spot rate...
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60-day interest rate (simple, p.a.) are 3% at home (usd) and 4% abroad (eur). The spot rate moves from 1.000 to 1.001.
(a) What is the return differential, and what is the corresponding prediction of the change in the forward rate?
(b) What is the actual change in the forward rate?
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a The return differential is r tT r tT 0036 0046 00017 The predi...View the full answer
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International Finance Putting Theory Into Practice
ISBN: 978-0691136677
1st edition
Authors: Piet Sercu
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