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Exchange rate in the forward market

Problem:

In the spot market, 1 U.S. Dollar equals 1.68 Canadian Dollars. Six month Canadian securities have an annualized return of 12 percent. Six month U.S. securities have an annualized return of 7.5 percent. If interest rate parity holds, what is the U.S. dollar/ Canadian dollar exchange rate in the 180-day forward market?

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Finance Basics: Exchange rate in the forward market

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Finance Basics: Exchange rate in the forward market

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