Question: Using a no-arbitrage argument derive an expression for the k-period forward price in domestic currency of one unit of foreign currency. Denote that Fk is

Using a no-arbitrage argument derive an expression for the k-period forward price in domestic currency of one unit of foreign currency. Denote that Fk is the k-period forward price, S the current spot price of the foreign currency, r is the one-period risk free domestic interest rate and rf is the one-period foreign interest rate.

(8 marks)

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