Assume there exists a forward foreign exchange market in


Assume there exists a forward foreign exchange market in Ghana and this market has the based on the information characteristics below. Assuming there is interest rate parity; calculate UK 90-day interest rate per annum based on the information below.

90 day interest rates (Ghana) …….13% p.a

90 day interest rates (UK) ………….? p.a

Spot rate…………………………..GHS 6.1000/£

90 day forward rate………………..GHS 6.1200/£

Assume that the Nigerian Naira exhibits a 6-month interest rate of 12 percent p.a while the U.S. dollar exhibits a 6- month interest rate of 2.5%. From the U.S investor’s point of view the U.S. dollar is the home currency. According to interest rate parity argument what should the forward rate premium of the peso with respect to the U.S. dollar be?

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Financial Management: Assume there exists a forward foreign exchange market in
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