Interest rates for money market deposits and loans with a, Ask an Expert

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Interest rates for money market deposits and loans with a time to maturity of 180 days: i(USD,180d)=2.00% p.a., i(EUR,180d)=0.75% p.a. Forward rate for a forward contract with a time to maturity of 180 days F(180d)= USD 9.0200/EUR, spot rate S=USD 9.000/EUR

Please give details workings and explanation

Is the quoted or the CIP implied forward rate higher? How would your arbitrage strategy change if relationship between the two forward rates would be the other way round?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92657322

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