Fisher Effect (CIP) Illustration 2


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Fisher Effect (CIP) Illustration 2

The spot rate in Canada for British Pound is CAD 2.2646/GBP. Forward rate for 3 months is CAD 2.2520/GBP. Interest rates in Canada are 2.64% per annum for 3 months. Find interest rates in Britain to avoid any arbitrage possibilities.

(Ans.: 4.89%)

 


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