An exchange rate is 0.7000 and the six-month domestic and foreign risk-free interest rates are 5% and

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An exchange rate is 0.7000 and the six-month domestic and foreign risk-free interest rates are 5% and 7%(both expressed with continuous compounding). What is the six-month forward rate?

Assuming that the forward rate for the market is 0.8 set up a trade to show how the seller benefits from this rate?

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International Accounting

ISBN: 978-0077862206

4th edition

Authors: Timothy Doupnik, Hector Perera

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Posted Date: Apr 19, 2024 08:58 AM

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An exchange rate is 0.7000 and the six-month domestic and foreign risk-free interest rates are 5% and

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Expert Answer:

To calculate the sixmonth forward rate we can use the interest rate parity IRP formula The IRP state... View the full answer

International Accounting

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