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Suppose the spot and six-month forward rates on the South Korean won are SKW 1,304.99 and SKW 1,314.80, respectively. The ann

It's not 1298.6242

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Answer #1

Forward Rate = \small Spot Rate * (\frac{1+South Korean Interest Rate/2}{1+ US Interest Rate/2 })

=\small 1304.99 * (\frac{1+0.05/ 2}{1+ 0.04/2 })

= 1311.39

** Rates are divided by 2 as the period is 6 months.

Forward Rate is 1311.39

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