14 years ago 14 years ago

Forex and Interest Rate Illustration 5

by Score Tutorial 14 years ago14 years ago

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Forex and Interest Rate Illustration 5

The following table shows interest rates for $ and FFr. The spot exchange rate 7.05 FFr per dollar (All the percentage rates are annualized).

3 months

Dollar interest rate 11.5%

France interest rate 19.5%

Find 3 months forward rate. (Mumbai University, October 2003)

(Ans.: Forward rate as per interest rate parity theory would be FFr 7.1871/$)

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Forex and Interest Rate Illustration 5

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