Kenneth R. Szulczyk
- Using the approximation, how much should the exchange rate change if the home interest
rate is 10%, the foreign interest rate equals 5%, and you plan to invest for 180 days? - You invested money into a foreign country for two years. Foreign interest rate equals 16%,
and the exchange rate is appreciating at 4% per year. Estimate your return on the foreign
investment. - Domestic interest rate for Europe is id = 7% while the United States interest rate equals if =
5%. If the spot exchange rate is S = 0.7 € / $1, estimate the approximate price of a forward
contract due in six months.