IF INTEREST RATE PARITY HOLDS
FORWARD RATE IN 2 YEARS = SPOT RATE *(1+ RCAN - RUS)^2
FORWARD RATE IN 2 YEARS = 1.323*(1+0.026 - 0.021)^2 = 1.3363 (rounded to 4 decimals)
Answer : CAD 1.3363 (Thumbs up please)
Assume a risk-free asset in the U.S. is currently yielding 2.1 percent while a Canadian risk-free...
You want to find out forward rate by interest rate parity. Suppose U.S. risk free rate is 4.0% , and Canadian risk-free rate is 2.3% . The current spot exchange rate is 1.16 canadian dollar per U.S. dollar. What is the approximate 2 year forward rate if interest rate parity holds?
Assume interest rate parity holds. The one-year risk-free rate in the U.S. is 4.02 percent and the one-year risk-free rate in Japan is 4.35 percent. The spot rate between the Japanese yen and the U.S. dollar is ¥114.33/$. What is the one-year forward exchange rate? Multiple Choice ¥117.53/$ ¥114.33/$ ¥113.97/$ ¥114.69/$ ¥116.56/$
30. Suppose that the spot rate on the Canadian dollar is C$1.40/USs. The risk-free nomin in the U.S. is 8 percent while it is only 4 percent in Canada. Which one of the follo one-year forward rates best establishes the approximate interest rate parity conditio A. CS1.278 B. C$1.344 C. CS1.355 D. CS1.456 E. C$1.512
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 $1. A risk-free asset in Japan is currently earning 5 percent. If interest...
The 1 year forward rate is CAD 1.36/Euro. The Canadian risk free rate is 3.4%, the Euro risk free rate is 2.6%. If the Law of One Price holds, what should the spot exchange rate be, in CAD per Euro?
The spot rate between the Japanese yen and the U.S. dollar is ¥106.57/$, while the one-year forward rate is ¥105.73/$. The one-year risk-free rate in the U.S. is 2.39 percent. If interest rate parity exists, what is the one-year risk-free rate in Japan?
Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.01081, while in the 90-day forward market 1 Japanese yen = $0.01084. In Japan, 90-day risk-free securities yield 2.1%. What is the yield on 90-day risk-free securities in the United States? Round your answer to two decimal places. Do not round intermediate calculations.
Assume the spot rate for the British pound is currently 15604 while the year forward rate is €15587. A risk tree asset in the United States is currently earning 26 percent of interest rate party holds, approximately what can you earn on a 1-year tree British security Ο Ο Ο Ο Ο Multiple Choice o 228% 228x o 223 223% o 246% лек o О 249% o О 23%
Assume that interest rate parity holds. The U.S. five‑year interest rate is 0.07 annualized, and the Mexican five‑year interest rate is 0.03 annualized. Today’s spot rate of the Mexican peso is $0.30. What is the approximate 10‑year forecast of the peso’s spot rate if the 10‑year forward rate is used as a forecast?
Assume that interest rate parity holds and that 90-day risk-free securities yield 5% in the United States and 5.3% in Germany. In the spot market, 1 euro equals $1.40. What is the 90-day forward rate? Is the 90-day forward rate trading at a premium or a discount relative to the spot rate?