Currently, the spot exchange rate is $153E and the three-month forward exchange rate is $1.55/E The interest rate is 8 percent per annum in the US. and 5.8 percent per annum in the U.K. Assume that you can borrow as much as $1,530,000 or £1.000,000. o. Determine whether interest rate parity is currently holding. O Yes O No

Currently, the spot exchange rate is $153E and the three-month forward exchange rate is $1.55/E The interest rate is 8 percent per annum in the US. and 5.8 percent per annum in the U.K. Assume that you can borrow as much as $1,530,000 or £1.000,000. o. Determine whether interest rate parity is currently holding. O Yes O No

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter20: Short-term Financing

Section: Chapter Questions

Problem 4ST

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