A US company wants to arrange a forward contract to buy euros in year. The interest rates for investments in US dollars and euros are 3% and 4%, respectively. The current exchange rate is 0.79 euros to a dollar. What is the forward exchange rate?
A US company wants to arrange a forward contract to buy euros in year. The interest rates for investments in US dollars and euros are 3% and 4%, respectively. The current exchange rate is 0.79 euros to a dollar. What is the forward exchange rate?
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter6: Managing In The Global Economy
Section: Chapter Questions
Problem 6E
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A US company wants to arrange a forward contract to buy euros in year. The
interest rates for investments in US dollars and euros are 3% and 4%, respectively. The
current exchange rate is 0.79 euros to a dollar. What is the forward exchange rate?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F10c0b5fe-458a-45c0-96cd-5f2748e91170%2F435f1b3e-e3df-4884-9605-b5a9d3e6b052%2Fr622gc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:3.
A US company wants to arrange a forward contract to buy euros in year. The
interest rates for investments in US dollars and euros are 3% and 4%, respectively. The
current exchange rate is 0.79 euros to a dollar. What is the forward exchange rate?
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