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Assume the following information is available for the U.S. and China:

U.S. China

Nominal one-year interest rate 5% 2%

Expected inflation 4.5% 0.5%

Spot rate ----- $.2000/renminbi

What shall the one-year forward rate for renminbi be if the interest rate parity holds?(Use the exact formula for calculations.)

$0.1943/renminbi

$0.2059/renminbi

$0.1923/renminbi

$0.2080/renminbi

$0.2000/renminbi

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92320703

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