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

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answerhappygod
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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

Post by answerhappygod »

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 7-year forward rate? Hint: in
(USD/GBP)
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