What is the 90-day forward rate

Reference no: EM13270474

Assume that interest rate parity holds and that 90-day risk-free securities yield a nominal annual rate of 3% in the United States and a nominal annual rate of 35% in the United Kingdom. In the spot market, 1 pound $1.56.
a. What is the 90-day forward rate?
b. Is the 90-day forward rate trading at a premium or a discount relative to the spot rate?

Reference no: EM13270474

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