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Question on interest rate parity

At present, the spot exchange rate is $1.50/£ and the three-month forward exchange rate is $1.52/£. The interest rate of three month is 8.0% per annum in the U.S. and 5.8% per annum in the U.K. Suppose that you can borrow as much as $1,500,000 or £1,000,000. Find out whether the interest rate parity is holding currently.

Let’s summarize the given data primary:

   S = $1.5/£; F = $1.52/£;  I$ = 2.0%;  I£ = 1.45%

   Credit = $1,500,000 or £1,000,000.

     (1+I$) = 1.02

    (1+I£)(F/S) = (1.0145)(1.52/1.50) = 1.0280

Therefore, IRP is not holding exactly.

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