The one-year forward exchange rate is Rupees 50/$. If the one-year interest rate in the United States is 5% and in India is 8%, what is the spot exchange rate so as to preclude arbitrage?
A) Rupees 47.23/$
B) Rupees 48.61/$
C) Rupees 48.99/$
D) Rupees 49.32/$
Correct Answer:
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