The spot exchange rate of EUR

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1. Suppose that the spot exchange rate of EUR is 1.2545 USD for 1Euro. Suppose that the 3 months USD interest rate is 0.50% annualized and Euro interest rate is 0.05% annualized (rates are continuously compounded). What is the 3-month forward exchange rate?

2. Your credit card says it charges 15.4% APR with daily compounding. What real annual rate are they charging? That is, find the effective annual rate (EAR). Express in percentage but do not include the % sign, and round it to two decimal places

3. What is the six-month forward price for a stock providing no income if the stock price is 100 and the continuously compounded interest rate is 2%? What is the forward price if the stock pays a 1% continuously compounded dividend yield?

Reference no: EM131976430

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