CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

Suppose the forward discount for the dollar is 2% per year, and the current spot rate is 108.40Yen/$. Based on the hypothesis of uncovered interest rate parity, what is the expected spot rate in one year?
Correct Answer: If the forward discount for the dollar is 2% per year, the dollar is expected to depreciate and the expected spot rate would be 108.40 - (1 - .02) = 106.23Yen/$.

User Contributed Comments 1

User Comment
GileOne 108.40 * 0.98=106.23
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