The following is information on interest-rates and exchange rates for Australia and the U.K. being quoted by
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The following is information on interest-rates and exchange rates for Australia and the U.K. being quoted by ANZ bank (assume there are no bid-ask spreads, for simplicity). The spot exchange rate for the number of AUD (Australian dollars) per GBP (British pound) is 1.8005. The annualized 6 month interest-rate in Australia (respectively, the U.K.) is 10% (respectively, 8%). Using the formula given in class, what is the 6 month forward exchange rate (consistent with no arbitrage) expressed as the number of AUD per GBP? Assume 6 months is exactly 0.5 years.
Related Book For
Principles of Corporate Finance
ISBN: 978-0077404895
10th Edition
Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen
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