Assume that interest rate parity holds and that 90-day, Ask an Expert

Management Studies

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 Germany. In the spot market, 1 euro equals $0.80 dollar.

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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Business Management, Management Studies

Category:- Business Management
Reference No.:- M92177613

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