Mathematics · Foreign Exchange
Suppose the spot exchange rate is €1.522 per $1, the six-month interest rate in the Eurozone is 3% per annum, and the six-month interest rate in the US is 5% per annum. What is the six-month forward exchange rate predicted by Interest Rate Parity?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1€1.536 per $1
- 2€1.507 per $1✓
- 3€1.520 per $1
- 4€1.499 per $1
Correct answer
€1.507 per $1
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