An Exchange Rate Is 0

question 18

Multiple Choice

An exchange rate is 0.7000 and the six-month domestic and foreign risk-free interest rates are 5% and 7% (both expressed with continuous compounding) .What is the six-month forward rate?

• A) 0.7070
• B) 0.7177
• C) 0.7249
• D) 0.6930

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Definitions:

Impedance

The measure of opposition that a circuit presents to the flow of alternating current, represented as a complex number and includes both resistance and reactance.

High-pass Filter

An electronic filter that allows signals with frequencies above a certain cutoff frequency to pass through while attenuating those below it.

Output Signal

The information or power delivered by a system or device as a response to a specific input, often used in the context of electronics or communication.

PI-type Filters

A form of electronic filter design that combines a parallel capacitor with a series inductor to block unwanted frequencies, characterized by its resemblance to the letter "PI" in schematic diagrams.