September 2023 If interest rate parity is satisfied and the interest rate in the
September 2023 Business & Finance Assignment
If interest rate parity is satisfied and the interest rate in the U. S. is greater than the interest rate in Japan we can conclude that:
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The interest rates (bid and offered) in the U. S. are 2.5% and 2.75%. The corresponding rates in Germany are 1.5% and 1.6%. The spot exchange rate is quoted as $1.25 (bid) – $1.28 (ask) per euro. Compute the forward rate (dollars per euro) achievable in a synthetic one year forward contract to sell euros for dollars. Round the answer to four decimal places and enter it without the currency symbol.
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