Suppose that the one-year U.S. interest rate is 8% and the equivalent one-year India interest rate is 12%. According to approximate covered interest parity, is there a forward premium, forward discount or forward flat on the dollar?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter22: International Financial Management
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Suppose that the one-year U.S. interest rate is 8% and the equivalent one-year India interest rate is
12%. According to approximate covered interest parity, is there a forward premium, forward
discount or forward flat on the dollar?
Transcribed Image Text:Suppose that the one-year U.S. interest rate is 8% and the equivalent one-year India interest rate is 12%. According to approximate covered interest parity, is there a forward premium, forward discount or forward flat on the dollar?
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