Define the dominican republic peso

Reference no: EM131478543

Question: Assume an offshore FX derivative market is unavailable for Dominican Republic Peso (DOP) and a corporation approaches a commercial bank offshore to sell its DOP revenues and buy USD. Determine the price of a one-year USD DOP FX nondeliverable forward (NDF) under the following assumptions:

• The withholding tax on investing in investments in DOP fixed income instruments is 10 percent.

• The current one-year Dominican Republic treasury bills yield at 9.5 percent.

• The one-year USD dollar rate of 0.40 percent.

• The same convention applies to DOP and USD rates.

Reference no: EM131478543

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