Suppose the spot price for euro is 115 the futures price, Ask an Expert

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Suppose the spot price for Euro is $1.15, the futures price for delivery in 6 months is $1.1471286. Assume that the 6 month borrowing/lending rate in Euro is 0.75percent (annually, continuous compounding) and the corresponding rate in $ is 0.25percent (annually, continuous compounding).

(This is an FX application using the same cost of carry model).

What are the implied interest rates in Europe and the U.S.?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91267708

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