What must the six-month forward rate be to prevent arbitrage


Problem

Suppose the spot and six-month forward rates on the South Korean won are W1,304.87 and W1.315.04, respectively. The annual risk-free rate In the United States Is 4 percent, and the annual risk-free rate In South Korea Is 5 percent.

What must the six-month forward rate be to prevent arbitrage?

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Financial Accounting: What must the six-month forward rate be to prevent arbitrage
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