The One-Year Forward Exchange Rate Is 40 INR/USD

question 111

Multiple Choice

The one-year forward exchange rate is 40 INR/USD.If the one-year interest rate in the United States is 4% and in India is 7%,what is the spot exchange rate so as to preclude arbitrage?

• A)38.88
• B)39.01
• C)39.23
• D)39.32
• E)39.46

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