Business, 18.10.2019 19:00 ianmartin6080
Suppose that the interest rate of government bonds in the euro area at 1 year maturity is 10%, or i€ =0.10 at the same time , the interest rate of government bonds in the usa at 1 year maturity is 5%, or i$=0.05
suppose that the spot exchange rate between euro € and us dollar $ is, in us dollars, 1€=$1.37
the forward rate - according to the covered interest parity -
a)selling at forward premium
b)equal to the spot rate
c)none of the above
d)selling at forward discount
Answers: 1
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