Purchase Solution

International Finance Problem: The Interest Rate Parity formula

Not what you're looking for?

Ask Custom Question

The current spot rate is Ringett 2.5/SF. The expected spot rate in one year is Ringett 2.8/SF. The current Swiss interest rate is 8%. What Malaysian interest rate will cause IFE to hold?

The correct answer is 12.32%. I left this problem blank because I followed this formula:
S1-S2/S2 = i$-iyen/1+iyen

(Note the Yen and USD symbols are used as just an example) In this math problem I would have to use the ringett and the SF (swiss franc).

Purchase this Solution

Solution Summary

The solution solves a problem using the Interest Rate Parity formula.

Solution Preview

The Interest Rate Parity formula is:
1 + Malaysian interest rate = (Forward ...

Purchase this Solution

Free BrainMass Quizzes
Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.


This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.


This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)