CFA Practice Question

There are 227 practice questions for this study session.

CFA Practice Question

The spot won/$ exchange rate is 833 won/$ and the one-year forward rate is 863 won/$. If the annual interest rate on dollar CDs is 9.5%, what would you expect the annual interest rate to be on won CDs?
A. 5.3%
B. 13.4%
C. 25.6%

User Contributed Comments 3

User Comment
danlan2 833(1+x)/1.095=863, so x=13.4%
volkovv r(fc) = F/S * [1+r(dc)] - 1
r(lira) = 863/833 * 1.095 - 1 = .134 or 13.4%

JZERMENO THANKS danlan2
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