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Hi,I am doing a question from one of the Sample Papers on Parity
The spot exchange rate is €1·543 per $1. The domestic short-term interest rate is 2% per year, while the foreign short-term interest rate is 5% per year.
I went for 1.543 x Domestic 1.01 / Foreign 1.0125 = 1.520 but its the other way around
1.543 x Foreign 1.0125 / Domestic 1.01 – 1.566So the only assumption I can think of is that its always foreign first that gets multipled then domestic that gets divided??
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