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Predict the exchange rate

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Suppose the spot exchange rate for the Hungarian florin is HUF 238. Interest rates in the United States are 4.1 percent per year. They are 3.6 percent in Hungary. What do you predict the exchange rate will be in three years?

a) HUF 234.45
b) HUF 236.90
c) HUF 241.59
d) HUF 236.81
e) HUF 239.19

How does this derive the solution for this problem?

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Solution Summary

The solution step-by-step predicts the exchange rate for the Hungarian florin in next 3 years.

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