Question: Use Table_22.1 to answer the following questions: If the 1-year forward exchange rate for the Brazilian real is USD1 = BRL4.480 and the 1-year interest

Use Table_22.1 to answer the following questions:

If the 1-year forward exchange rate for the Brazilian real is USD1 = BRL4.480 and the 1-year interest rate on dollars is .5%, what is the 1-year interest rate in Brazil?

Table 22.1: Exchange rates in February 2014

Use Table_22.1 to answer the following questions:
If the 1-year forward

Country Currency Exchange Rate Europe Eurozone countries Sweden Switzerland United Kingdom Euro (EUR or ) Krona (SEK) Franc (CHF) Pound (GBP or ) 1.376* 6.485 0.888 1.668 Americas Brazil Canada Mexico Real (BRL) Dollar (CAD) New peso (MXN) 2.396 1.095 13.231 Asia/Africa Australia China China (Hong Kong) India Japan South Africa South Korea Dollar (AUD) Yuan (CNY) Dollar (HKD) Rupee (INR) Yen (JPY or Rand (ZAR) Won (KRW) 1.107 6.067 7.755 62.180 102.340 10.872 1,065.500 Direct quotes (number of U.S. dollars per unit of foreign currency). Other quotes are indirect (units of foreign currency per U.S. dollar). Source: Financial Times, February 18, 2014, available at www.ft.com.

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