Assume that interest rate in the US is 7%, while that in the UK is 3%. Assume

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Assume that interest rate in the US is 7%, while that in the UK is 3%. Assume also that the spot and one-month forward exchange rates between the USD and the pound sterling are $1.20 and $1.25.

Does interest rate parity hold between the UK and the US?

Related Book For answer-question

International Finance Theory and Policy

ISBN: 978-0133423648

10th edition

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz

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Posted Date: Jun 22, 2023 03:11 AM

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Assume that interest rate in the US is 7%, while that in the UK is 3%. Assume

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International Finance Theory and Policy

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