Q4. Bowman also knows that if the forward rate is higher than what interest rate parity indicates, the appropriate strategy would be to borrow: A) dollars, convert to pounds at the forward rate, and lend the pounds. B) dollars, convert to pounds at the spot rate, and lend the pounds. C) pounds, convert to dollars at the spot rate, and lend the dollars.
Q5. Based on the information above, Bowman would like to calculate the forward rate implied by interest rate parity. The answer is: A) 1.82 $/₤. B) 1.88 $/₤. C) 1.67 $/₤.
Q6. A junior colleague asks Bowman for the mathematical equation that describes interest rate parity. Which of the following equations most accurately describes interest rate parity? (S0 is the spot exchange rate expressed in dollars per unit of foreign currency, F0,T is the forward exchange rate, and rUS and rFX are the risk-free rates in the U.S. and foreign country.) A) S1 = F0,t [(1+rUS) / (1+rFX)]. B) F0,t = S0 [(1+rFX) / (1+rUS)]. C) F0,t = S0 [(1+rUS) / (1+rFX)].
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发表于 2009-1-13 14:51
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