Assume that interest rate parity exists

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1. Your account pays interest at 5 percent p.a.. You deposit $ 22,367 in it today. You must have exactly $ 79,722 in the account at the end of two years. What should you do at the end of the first year (that is, what dollar amount must you deposit) to ensure this?

2. Assume that interest rate parity exists. The spot rate of the Argentine peso is $.40. The one-year interest rate in the U.S. is 7% versus 12% in Argentina. What is the forward rate of Argentine peso? (Go up to 5 decimal spaces)

Reference no: EM131859982

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