# Deriving the Forward Rate Assume that annual interest rates in the United States are 4 percent, whereas interest rates in France are 6 percent. According to IRP, what should the forward rate premium or discount of the euro be? If the euro’s spot rate is \$1.10, what should the one-year forward rate of the euro be?

FindFind

### International Financial Management

14th Edition
Publisher: Cengage
ISBN: 9780357130698
FindFind

### International Financial Management

14th Edition
Publisher: Cengage
ISBN: 9780357130698

#### Solutions

Chapter 7, Problem 21QA
Textbook Problem

## Deriving the Forward Rate Assume that annual interest rates in the United States are 4 percent, whereas interest rates in France are 6 percent. According to IRP, what should the forward rate premium or discount of the euro be? If the euro’s spot rate is \$1.10, what should the one-year forward rate of the euro be?

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