# Forward Rates for Different Time Horizons Assume that interest rate parity exists, along with the following information: Spot rate of British pound = \$ 1.80 6-month forward rate of pound = \$ 1.82 12-month forward rate of pound = \$ 1.78 Is the annualized 6 -month U.S. risk-free interest rate greater than, less than, or equal to the British risk-free interest rate? Is the 12 -month U.S. risk-free interest rate greate than, less than, or equal to the British risk-free intere rate?

FindFind

### International Financial Management

14th Edition
Publisher: Cengage
ISBN: 9780357130698
FindFind

### International Financial Management

14th Edition
Publisher: Cengage
ISBN: 9780357130698

#### Solutions

Chapter 7, Problem 39QA
Textbook Problem

## Forward Rates for Different Time Horizons Assume that interest rate parity exists, along with the following information:Spot rate of British pound = \$ 1.80 6-month forward rate of pound = \$ 1.82 12-month forward rate of pound = \$ 1.78 Is the annualized 6 -month U.S. risk-free interest rate greater than, less than, or equal to the British risk-free interest rate? Is the 12 -month U.S. risk-free interest rate greate than, less than, or equal to the British risk-free intere rate?

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