Question
1.Calculate the forward discount (or premium) for the following spot and three-month forward rates: 1)S =...
1.Calculate the forward discount (or premium) for the following spot and three-month forward rates:
1)S = $2/£1 and F = $2.01/£1
2) S = $2/£1 and F = $1.96/£1
2.What would happen to the dollar/peso exchange rate if the interest rate increased in the US but remained unchanged in Mexico? Explain using the graph.
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