Assume the interest rate in Australia is 10%, and the interest rate in Europe is 5% and that covered interest parity hol

Business, Finance, Economics, Accounting, Operations Management, Computer Science, Electrical Engineering, Mechanical Engineering, Civil Engineering, Chemical Engineering, Algebra, Precalculus, Statistics and Probabilty, Advanced Math, Physics, Chemistry, Biology, Nursing, Psychology, Certifications, Tests, Prep, and more.
Post Reply
answerhappygod
Site Admin
Posts: 899603
Joined: Mon Aug 02, 2021 8:13 am

Assume the interest rate in Australia is 10%, and the interest rate in Europe is 5% and that covered interest parity hol

Post by answerhappygod »

Assume the interest rate in Australia is 10%, and the interest
rate in Europe is 5% and that covered interest parity holds. For
the following exchange rates, find the forward exchange rates
when E$/€=0.9; E$/€=1.2;
and E$/€=1.4 respectively
A. F$/€=0.045; F$/€=0.06;F$/€=0.07
respectively
B.F$/€=0.945; F$/€=1.26;F$/€=1.47
respectively
C. F$/€=1.05; F$/€=1.1025;F$/€=1.365
respectively
D.F$/€=1.11; F$/€=0.83;F$/€=0.714
respectively
E.
F$/€=0.855; F$/€=1.14;F$/€=1.33
respectively
Please show all working out and formula used aswell
Thankyou
Join a community of subject matter experts. Register for FREE to view solutions, replies, and use search function. Request answer by replying!
Post Reply