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What is the forward rate

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Problem - INTEREST RATE PARITY - Assume that interest rate parity holds and that 90-day risk-free securities yield a nominal annual rate of 3% in the United States and a nominal annual rate of 3.5% in the United Kingdom. In the spot market, 1 pound = $1.29.

a. What is the 90-day forward rate?

b. Is the 90-day forward rate trading at a premium or a discount relative to the spot rate?

Reference no: EM132802955

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