Question: Use the information below to answer the following…
Use the information below to answer the following questions.
Currency per U.S. $ Australia dollar 1.2385
6-months forward 1.2348
Japan yen 100.4100
6-months forward 99.9700
U.K. pound .6793
6-months forward .6780
Suppose interest rate parity holds, and the current risk-free rate in the United States is 5 percent per six months.
Use the approximate interest rate parity condition to answer this question.
- What must the six-month risk-free rate be in Australia?
- What must the six-month risk-free rate be in Japan?
- What must the six-month risk-free rate be in Great Britain?
Trackbacks and pingbacks
No trackback or pingback available for this article.