As per Interest rate parity, Forward rate = Spot rate*(1+Interest rate Britain)/(1+Interest rate US)
1.5587 = 1.5604*(1+Interest Rate Britain)/(1+2.6%)
Interest rate in Britain = 2.4882%
i.e. 2.49%
Assume the spot rate for the British pound is currently 15604 while the year forward rate...
The spot rate for the Japanese yen currently is ¥106 per $1. The one-year forward rate is ¥105 per $1. A risk-free asset in Japan is currently earning 5 percent. If interest rate parity holds, approximately what rate can you earn on a one-year risk-free U.S. security? 74. The spot rate for the Japanese yen currently is ¥106 per $1. The one-year forward rate is $105 per $1. A risk-free asset in Japan is currently earning 5 percent. If interest...
Assume the spot price of the British pound is currently $1.85. If the risk-free interest rate on 1-year government bonds is 5.3% in the United States and 6.2% in the United Kingdom, what must be the forward price of the pound for delivery one year from now? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Forward price
The one-year forward rate of the British pound is $1.3985, while the current spot rate is $1.2239. Based on the forward rate, what is the expected percentage change in the British pound over the next year? Round to four decimals. Example: 0.1234
A) The spot price of the British pound is currently $2.00. If the risk-free interest rate on 1-year Government bonds is 4% in the United States and 6% in the United Kingdom, what must be the forward price of the pound for delivery 1 year from now? B) Assume that the spot price of gold is $1,500 per troy ounce, the risk-free interest rate is 2%, and storage and insurance costs are zero. 1) What should be the forward price...
Assume that the spot exchange rate of the British pound is $1.73/£. How will this spot rate adjust according to PPP if the United Kingdom experiences an inflation rate of 7 percent while the United States experiences an inflation rate of 2 percent?
The spot rate between the U.K. and the U.S. is £.7614/$, while the one-year forward rate is 7540/$. The risk-free rate in the U.K. is 4.59 percent and risk-free rate in the United States is 274 percent. How much in profit can you earn on $11,000 utilizing covered interest arbitrage? Multiple Choice ο $9168 ο S25313 ο $10315 ο S276 86 ο S316 41
If the spot rate of the British pound is $2.2, and the 180-day forward rate is $2.25, what is the annualized premium or discount? (1pt) 3.
Suppose the spot rate and forward rate for the British pound are $1.25/₤ and $1.2/₤ respectively. Assume the forward pound is selling at an 8% (annualized) discount, what is the number of days of the forward contract? a. 60 days b. 90 days c. 180 days d. 30 days
Given that the spot rate is 1.5 euros per pound and the forward euro-pound exchange rate is 1.575 euros per pound calculate the forward premium discDunt on the British pound and indicate which of the two it is. Consider a Dutch investor with 1 000 euros to pace in a bank deposit in either the Netherlands or Great Britain. The one-year interest rate on bank deposits is 2% in Britain and 4.04% in the Netherlands. The one year forward euro-pound...
Currently the spot exchange rate is $1.558 per pound (USD/GBP). The interest rate in the UK is 6%. The one-year forward exchange rate is $1.5200/GBP. If interest rate parity holds, what must be the US interest rate for the same period?