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65
An exchange rate is 0.7000 and the six-month domestic and foreign risk-free interest rates are 5% and 7% (both expressed with continuous compounding). What is the six-month forward rate?
A. 0.7070
B.0.7177
C.0.7249
D.0.6930
A. 0.7070
B.0.7177
C.0.7249
D.0.6930
Answer: D
The six-month forward rate is 0.7000eā(0.05ā0.07)Ć0.5=0.6930.
The six-month forward rate is 0.7000eā(0.05ā0.07)Ć0.5=0.6930.
Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015