Suppose you observe a spot exchange rate of $2.00/£. If interest rates are 5 percent APR in the U.S. and 2 percent APR i
Posted: Thu May 19, 2022 6:20 am
Suppose you observe a spot exchange rate of $2.00/£. If interest rates are 5 percent APR in the U.S. and 2 percent APR in the U.K., what is the no- arbitrage 5-year forward rate? Hint: in (USD/GBP)