What is the forward exchange rate consistent

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Reference no: EM132641988

Interest Rate Parity Formula tie the spot rate to the expected forward rate using the relationship between interest rates in two countries.

The spot rate equals .71 Pds/$

If the annual interest rate in USA is presently 3.0%

The annual interest rate in UK is presently 6.0%

What is the forward exchange rate consistent with IRP in 252 days? _____ Pds

Use the forward rate calculated in the problem above.

Calculate the % forward rate premium (or discount) for the UK (pounds)

Note: The currency whose forward exchange rate shows strengthening is at a premium.

_____ is the percent premium for (US/Pds)?

Reference no: EM132641988

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