Exchange rates and arbitragesuppose the spot and 180-day, Ask an Expert

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Exchange Rates and Arbitrage

Suppose the spot and 180-day forward rates on the Norwegian krone are Kr 5.82 and Kr 5.97, respectively. The annual risk-free rate in the United States is 3.62 percent, and the annual risk-free rate in Norway is 5.32 percent.

The 180-day forward rate on the Norwegian krone would have to be Kr/$ to prevent arbitrage. (Do not round intermediate calculations and round your final answer to 4 decimal places (e.g., 32.1616).)

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Financial Management, Finance

Category:- Financial Management
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