Assume that 90-day U.S. securities have a 4.5% annualized interestrate whereas 90-day Swiss securities have a 5% annualized interestrate. In the spot market, 1 U.S. dollar can be exchanged for 1.2Swiss francs. If interest rate parity holds, what is the 90-dayforward rate exchange between U.S. dollars and Swiss francs?(0.8323 $ per SFr or 1.2015 SFr per $)
Assume that 90-day U.S. securities have a 4.5% annualized interestrate whereas 90-day Swiss securities have a 5% annualized interestrate. In the spot market, 1 U.S. dollar can be exchanged for 1.2Swiss francs. If interest rate parity holds, what is the 90-dayforward rate exchange between U.S. dollars and Swiss francs?(0.8323 $ per SFr or 1.2015 SFr per $)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Assume that 90-day U.S. securities have a 4.5% annualized interest
rate whereas 90-day Swiss securities have a 5% annualized interest
rate. In the spot market, 1 U.S. dollar can be exchanged for 1.2
Swiss francs. If interest rate parity holds, what is the 90-day
forward rate exchange between U.S. dollars and Swiss francs?
(0.8323 $ per SFr or 1.2015 SFr per $)
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