Assume that interest rate parity holds and that 90-day risk-free securities yield 6% in the United States and 6.6% in Germany. In the spot market, 1 euro equals $1.31. What is the 90-day forward rate? Do not round intermediate calculations. Round your answer to four decimal places. Is the 90-day forward rate trading at a premium or discount relative to the spot rate?

Assume that interest rate parity holds and that 90-day risk-free securities yield 6% in the United States and 6.6% in Germany. In the spot market, 1 euro equals $1.31. What is the 90-day forward rate? Do not round intermediate calculations. Round your answer to four decimal places. Is the 90-day forward rate trading at a premium or discount relative to the spot rate?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter27: Multinational Financial Management

Section: Chapter Questions

Problem 12P

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