Your company has sent you on an overseas assignment in Budapest, Hungary. The current indirect rate...
Your company has sent you on an overseas assignment in Budapest, Hungary. The current indirect rate for the Hungarian forint is 187.90. If the 18-month interest rate in the U.S. is 3 percent and the 18-month interest rate in Hungary is 8.5% (annually), what is the 18-month forward rate?
Homework Answers
18 month interest rate in US =3%
18 Month interest in Hungary =8.5%
Number of years =18/12 =1.5
18 month forward rate =Indirect rate*(1+US rate)/(1+Hungary rate)
=187.90*((1+3%)/(1+8.5%))^1.5 =173.80
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