The six month forward exchange rate. Introduction: Foreign Exchange Rate: Foreign exchange rate refers to the rate required to obtain a currency in other country’s currency. Interest Rate Parity: Interest rate parity states that the variations in the interest rates of 2 countries is equilavent to the difference in the spot and future exchange rates between those two countries.

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Chapter 19, Problem 3P

Summary Introduction

To identify: The six month forward exchange rate.

Introduction:

Foreign Exchange Rate: Foreign exchange rate refers to the rate required to obtain a currency in other country’s currency.

Interest Rate Parity: Interest rate parity states that the variations in the interest rates of 2 countries is equilavent to the difference in the spot and future exchange rates between those two countries.

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