The current indirect rate is 151,the interest rate in the foreign country is 12%,the interest rate in the home country is 5%.What is the forward indirect rate if t = 2?

Question

Quizplus · Accepted Answer

The forward rate can be calculated using the interest rate parity formula, which is F = S * (1 + i_d) / (1 + i_f), where F is the forward rate, S is the spot rate, i_d is the domestic interest rate, and i_f is the foreign interest rate. Plugging in the given values: F = 151 * (1 + 0.05)^2 / (1 + 0.12)^2 = 171.80.

The Current Indirect Rate Is 151,the Interest Rate in the Foreign