The One-Year Forward Exchange Rate Is Rupees 45

question 3

Multiple Choice

The one-year forward exchange rate is Rupees 45/$.If the one-year interest rate in the United States is 5% and in India is 8%,what is the spot exchange rate so as to preclude arbitrage?

• A)43.23
• B)43.75
• C)43.99
• D)44.32

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