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What is forward annualized holding period return

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Reference no: EM132719909

From a recent trip, you recall a spot exchange rate of $3.65 = £3 and 1-year forward rate of £3=$3.75.

a) Suppose that the interest rates are 3% APR in the UK. Under IRP, what is the no-arbitrage 1-year interest rate in the US? Round to 4 decimal places.

b) What is forward annualized holding period return, round to 4 decimal places?

Reference no: EM132719909

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