Annual risk-free rate, The annual risk-free rate in the

Annual risk-free rate

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Reference no: EM131517001

value: 10.00 points

Suppose the spot and six-month forward rates on the Norwegian krone are Kr 5.71 and Kr 5.86, respectively. The annual risk-free rate in the United States is 3.51 percent, and the annual risk-free rate in Norway is 5.21 percent.

Using the approximation, the six-month forward rate on the Norwegian krone would have to be Kr/$ __(?)__ to prevent arbitrage. (Do not round intermediate calculations. Round your answer to 4 decimal places, e.g., 32.1616.)

Reference no: EM131517001

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