What will be forward rate if the current spot rate is €1= $1.40 and the risk-free rate in
America and Europe is 5% and 4.30% respectively.
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A three-month forward rate is equal to the spot rate multiplied by (1 + the domestic rate times 90/360 / 1 + foreign rate times 90/360). To calculate the forward rate, multiply the spot rate by the ratio of interest rates and adjust for the time until expiration
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