Use Figure 31.1 to answer the following questions. Suppose interest rate parity holds, and the current six-month
Question:
Use Figure 31.1 to answer the following questions. Suppose interest rate parity holds, and the current six-month risk-free rate in the United States is 2.3 percent. What must the six-month risk-free rate be in Great Britain? In Japan? In Switzerland?
Data in Figure 31.1
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Country/Currency Americas Argentina peso Brazil real Canada dollar Chile peso Columbia peso Ecuador US dollar Mexico peso Uruguay peso Asia-Pacific Australian dollar 1-month 3-month 6-month China yuan Hong Kong dollar India rupee Indonesia rupiah Japan yen 1-month 3-month 6-month USD Equivalent 0120 .1917 .7785 .001400 .000286 1 .0498 02366 .7577 .7580 .7583 .7587 1529 .1290 01354 .0000704 00966 .00958 .00950 .00939 Currency per USD 83.3481 5.2168 1.2846 714.10 3500.00 1 20.0641 42.2650 1.3198 1.3192 1.3188 1.3181 6.5407 7.7532 73.8361 14200 103.55 104.43 105.22 106.55 Country/Currency Europe Czech Rep. koruna Denmark krone Euro area euro Hungary forint Norway krone Poland Zloty Romania leu Russia ruble Sweden krona Switzerland franc 1-month 3-month 6-month Turkey lira U.K. pound 1-month 3-month 6-month Middle East/Africa Bahrain dinar Egypt pound USD Equivalent 04633 .1638 1.2188 00336496 .1157 .2706 .2502 01333 .1206 1.1260 1.1247 1.1232 1.1207 .1309 1.3496 1.3506 1.3511 1.3517 2.6525 .0637 Currency per USD 21.583 6.1043 .8205 297.18 8.6444 3.6957 3.9975 75.002 8.2899 .8881 .8891 .8903 .8923 7.6397 .7410 .7404 .7401 .7398 .3770 15.7007
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Corporate Finance
ISBN: 9781260772388
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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