Multiple Choice
Suppose you observe the spot euro at $1.38/€,the U.S.risk-free interest rate of 0.25% (continuously compounded) ,and the European risk-free interest rate of 0.75% (continuously compounded) .Identify the theoretical value of a six month foreign exchange futures contract (select the closest answer) .
A) $1.3815/€
B) $1.3765/€
C) $1.3785/€
D) $1.3825/€
E) $1.3755/€
Correct Answer:
Verified
Correct Answer:
Verified
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