What is the cross-exchange rate

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Reference no: EM13806003

1. Suppose that a US interest rate is 4% and the forward premium for the Korean won is 1%. What is the interest rate in the Korean market? (Assume that the US is home)

2. A currency trader observes that in the spot exchange market, one U.S. dollar can be exchanged for 12.55 Mexican pesos or for 5.36 Danish krone. What is the cross-exchange rate between the peso and the krone; that is, how many krones would you receive for every peso exchanged?

(Please show all your works)

Reference no: EM13806003

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