Suppose you have INR 10millions that you can invest in for one year anywhere in the world without any restriction. You are considering to either investing in the US or in India. The interest rate on one-year bonds in India is 9% and on one-year bonds in the US is 8%. The current exchange rate is INR 74.525/USD. What should be the one-year forward rate so that you earn the same return whether you invest in India or in the US. a. 73.84128 b. 74.525 c. 75.21505 d. All the options are wrong e. 70.12125
Suppose you have INR 10millions that you can invest in for one year anywhere in the world without any restriction. You are considering to either investing in the US or in India. The interest rate on one-year bonds in India is 9% and on one-year bonds in the US is 8%. The current exchange rate is INR 74.525/USD. What should be the one-year forward rate so that you earn the same return whether you invest in India or in the US. a. 73.84128 b. 74.525 c. 75.21505 d. All the options are wrong e. 70.12125
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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Suppose you have INR 10millions that you can invest in for one year anywhere in the world without any restriction. You are considering to either investing in the US or in India. The interest rate on one-year bonds in India is 9% and on one-year bonds in the US is 8%. The current exchange rate is INR 74.525/USD. What should be the one-year forward rate so that you earn the same
a.
73.84128
b.
74.525
c.
75.21505
d.
All the options are wrong
e.
70.12125
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