-Refer to Exhibit T13.1. Assume the international parity conditions hold. The current spot rate is S₀^£/€ = £2/€. If i^£ = 7% and i^€ = 5%, what is the expected future spot rate [E(S₃^£/€ ) ] at time t = 3?

Question

-Refer to Exhibit T13.1. Assume the international parity conditions hold. The current spot rate is S<sub>0</sub><sup>£/€</sup> = £2/€. If i<sup>£</sup> = 7% and i<sup>€</sup> = 5%, what is the expected future spot rate [E(S<sub>3</sub><sup>£/€</sup> ) ] at time t = 3? A) £1.890/€ B) £1.963/€ C) £2.020/€ D) £2.116/€ E) £2.250/€

Quizplus · Accepted Answer

The Answer of -Refer to Exhibit T13.1. Assume the international parity conditions hold. The current spot rate is S₀^£/€ = £2/€. If i^£ = 7% and i^€ = 5%, what is the expected future spot rate [E(S₃^£/€ )] at time t = 3?