Forward rate be to prevent arbitrage

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Reference no: EM13923827

Suppose the spot and six-month forward rates on the South Korean won are SKW 1,304.98 and SKW 1,314.82, respectively. The annual risk-free rate in the United States is 3 percent, and the annual risk-free rate in South Korea is 6 percent.

What must the six-month forward rate be to prevent arbitrage?

Reference no: EM13923827

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