Which is a possible explanation for the mispricing

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Problem 1: You calculate the six-month forward rate is not perfectly equal to the expected forward rate based on interest rate differentials. Which of the following is a possible explanation for the mispricing?

(a) Volatility in financial markets is making it difficult for borrowers and lenders to access interest rate markets

(b) The prices you have used may not be accurate or current

(c) The central bank has intervened in the market to support the local currency

(d) The liquidity impact of a large corporate transaction

(e) All of the above (a, b, c, d) are possible explanations

Reference no: EM132932064

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