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Prevent covered interest arbitrage

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Suppose the spot exchange rate for the Korean won (KRW) is KRW120/USD (USD is the U.S. dollar). If the risk-free rate of interest in the United States is 10% and the risk-free rate of interest in Korea is 5%, then what must be the one-year forward rate be to prevent covered interest arbitrage?

Reference no: EM133114681

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