One-year forward rate
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Suppose the annual risk-free rate in the U.S. is 3%. The annual risk-free rate in Pounds Sterling is 5%. The spot rate of exchange is .625pounds/$. What should the one-year forward rate be between pounds and dollars?
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The solution calculates one-year forward rate.
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Suppose the annual risk-free rate in the U.S. is 3%. The annual risk-free rate in Pounds Sterling is 5%. The spot rate of ...
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