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Question
Assume that the 6-month iUS = 10% and the 6-month iSwiss = 20%, and the spot rate is $1.20 per Swiss franc. Using the approximate covered interest rate parity condition, the 6-month forward rate ($/Swiss franc) is:
a. 1.08
b. 1.14
c. 1.26
d. 1.32
Answer
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Related questions
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Q:
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Q:
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Q:
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Considering the internal balance in an economy, which of the following could lead to lower interest rate and higher income?
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In foreign exchange forecasting, what is a good forecast?
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Q:
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Q:
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Q:
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Q:
A U.S. firm has a 1 million payment due to a Dutch firm in 90 days. The current spot rate is $1.00 per euro, and the 90-day forward rate is $1.11. Ben forecasts that the spot rate in 90 days will be $0.99. Jerry forecasts that the spot rate will be $1.12 in 90 days. The actual spot rate in 90 days turns out to be $1.10. Whose advice, between Ben and Jerry, will save the companys money?
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Q:
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b. 5%
c. 6.67%
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