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Basic Question 15 of 27
Suppose the forward discount for the dollar is 2% per year, and the current spot rate is 108.40Yen/$. Based on the hypothesis of uncovered interest rate parity, what is the expected spot rate in one year?
User Contributed Comments 1
| User | Comment |
|---|---|
| GileOne | 108.40 * 0.98=106.23 |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
explain international parity relations (covered and uncovered interest rate parity, forward rate parity, purchasing power parity, and the international Fisher effect);
describe relations among the international parity conditions;
evaluate the use of the current spot rate, the forward rate, purchasing power parity, and uncovered interest parity to forecast future spot exchange rates;
explain approaches to assessing the long-run fair value of an exchange rate;
CFA® 2025 Level II Curriculum, Volume 1, Module 8.