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In the article of the above title, the answer of writer explain about how to calculate the Mid-point exchange spot rate, but I cannot understand, pls. help to work it out
In future you should ask in the P4 Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.
The question gives you the rate at time 0 as 0.7810. Since the $ is devaluing at the rate of 5% a year, then at time 1 it will be 95% x 0.7810 = 0.7420.
At time 2 is will be 95% x 0.7420, and so on.
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