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c. As of 29/03/2021 at 06:00 pm, 1 year forward $/TL rate in Reuters quotations is 9.73 $/TL. Spot interest rates for one-year maturity are 20% and 0.5% in Turkey and the US, respectively. Calculate the equilibrium exchange rate for the spot market in Turkey by using the interest rate parity condition.

c. As of 29/03/2021 at 06:00 pm, 1 year forward $/TL rate in Reuters quotations is 9.73 $/TL. Spot interest rates for one-year maturity are 20% and 0.5% in Turkey and the US, respectively. Calculate the equilibrium exchange rate for the spot market in Turkey by using the interest rate parity condition.

Essentials Of Investments
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
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By considering the interest rate parity condition, answer each of the following: 

c. As of 29/03/2021 at 06:00 pm, 1 year forward S/TL rate in Reuters quotations is 9.73 S/TL. Spot interest rates for one-year maturity are 20% and 0.5% in Turkey and the US, respectively. Calculate the equilibrium exchange rate for the spot market in Turkey by using the interest rate parity condition. d. As of the same hour, the market closing rate is 8.15 S/TL. Evaluate the validity of the interest rate parity approach.
Transcribed Image Text:c. As of 29/03/2021 at 06:00 pm, 1 year forward S/TL rate in Reuters quotations is 9.73 S/TL. Spot interest rates for one-year maturity are 20% and 0.5% in Turkey and the US, respectively. Calculate the equilibrium exchange rate for the spot market in Turkey by using the interest rate parity condition. d. As of the same hour, the market closing rate is 8.15 S/TL. Evaluate the validity of the interest rate parity approach.
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