The home currency of ACB Co is the dollar ($) and it trades with a company in a foreign country whose home currency is the Dinar. The following information is available: Home country Foreign country Spot rate 20.00 Dinar per $ Interest rate 3% per year 7% per year Inflation rate 2% per year 5% per year What is the six-month forward exchange rate? A 20.39 Dinar per $ B 20.30 Dinar per $ C 20.59 Dinar per $ D 20.78 Dinar per $
I got an answer of (D), whereas the correct answer is (A), and the revision kit didnt give any explanation to it. kindly if you could just put down the workings of how to arrive at 20.39 Dinar per $ and how.