Multiple Choice
Assume that interest rate parity holds. The UK five-year interest rate is 5% annualized, and the Brazilian five-year interest rate is 8% annualized. Today's spot rate of the Brazilian real is £0.25. What is the approximate five-year forecast of the real's spot rate if the five-year forward rate is used as a forecast?
A) £0.2431
B) £0.2571
C) £0.2878
D) £0.2165
E) £0.2175
Correct Answer:
Verified
Correct Answer:
Verified
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