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What is the annualized forward discount

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Assume the spot rate on the BRL:USD is $0.213/1 BRL and the 180 day forward rate on the BRL:USD is $0.202/1 BRL.

a) What is the annualized forward discount or premium on the BRL:USD. (State whether your answer is a discount or premium).

b) If interest rate parity holds and the one year interest rate on the US dollar is 2.1% per year, what is the one year interest rate on the BRL (per year)?

Reference no: EM132491562

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