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What is the interest parity

Problem: The spot exchange between the U.S. dollar and the German mark is $.5500/DM. The dollar deposit rate is 8% and the DM deposit rate is 4%.

a. What is the interest parity? what is the six month forward rate if the covered interest parity holds?

b. What is the unbiased forward rate hypothesis? If the unbiased forward rate hypothesis holds, what do you expect the spot rate between the U.S. dollar and the German mark to be in six months

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