a are given that the annual Australian dollar interest rate is 1% and the erest rate is 2.5%. The spot rate for the United States dollar is $A1.20. (a) Using interest rate parity, calculate the forward rate premium of th with respect to the Australian dollar. (b) Using your answer to (a), calculate the one-year forward rate.
a are given that the annual Australian dollar interest rate is 1% and the erest rate is 2.5%. The spot rate for the United States dollar is $A1.20. (a) Using interest rate parity, calculate the forward rate premium of th with respect to the Australian dollar. (b) Using your answer to (a), calculate the one-year forward rate.
Chapter9: Forecasting Exchange Rates
Section: Chapter Questions
Problem 1ST
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