Assume that interest rate parity holds and that 90-day risk-free securities yield 5 percent in the United

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Assume that interest rate parity holds and that 90-day risk-free securities yield 5 percent in the United States and 5.3 percent in Britain. In the spot market 1 pound 1.65 dollars.

a. Is the 90-day forward rate trading at a premium or discount relative to the spot rate?

b. What is the 90-day forward rate?

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Fundamentals of Financial Management

ISBN: 978-0324302691

11th edition

Authors: Eugene F. Brigham, ‎ Joel F. Houston

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Question Posted: Aug 10, 2019 08:39 AM

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Assume that interest rate parity holds and that 90-day risk-free securities yield 5 percent in the United

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a r NOM of 90day US riskfree securities 5 r NOM of 90day Br...View the full answer

Fundamentals of Financial Management

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