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).© BrainMass Inc. brainmass.com June 4, 2020, 12:09 am ad1c9bdddf
The Interest Rate Parity formula is:
1 + Malaysian interest rate = (Forward ...
The solution solves a problem using the Interest Rate Parity formula.