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Hi,
I need help with Q2 from section A, specimen exam. the formula for forward rate is:
spot rate x (1+int rate foreign country)/(1+int rate in base country).Why do the ad the last bit at the power of 0.5? I know the formula is for fwd rate in 1 year time and the answer should be in 6 months time. However, I don’t understand…..
Many thanks,
Gabi
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