Homework Answers
Answer is d. 0.2526.
equilibrium forward rate = spot exchange rate*[(1+domestic interest rate)/(1+foreign interest rate)
equilibrium forward rate = 0.2458*[(1+0.11)/(1+0.08)] = 0.2458*(1.11/1.08) = 0.2458*1.027777777777778 = 0.2526
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