Suppose the spot and six-month forward rates on the South Korean won are SKW 1,1

Question

Suppose the spot and six-month forward rates on the South Korean won are SKW 1,128.16 and SKW 1,130.24, respectively. The annual risk-free rate in the United States is 2.5 percent, and the annual risk-free rate in South Korea is 3.1 percent. (Enter your answer as directed, but do not round intermediate calculations.)

What must the six-month forward rate be to prevent arbitrage? (Do not include the South Korean won sign (SKW). Round your answer to 4 decimal places (e.g., 32.1616).)

What must the six-month forward rate be to prevent arbitrage? (Do not include the South Korean won sign (SKW). Round your answer to 4 decimal places (e.g., 32.1616).)

Explanation / Answer

What must the six-month forward rate be to prevent arbitrage? (Do not include the South Korean won sign (SKW). Round your answer to 4 decimal places (e.g., 32.1616).)

What must the six-month forward rate be to prevent arbitrage? (Do not include the South Korean won sign (SKW). Round your answer to 4 decimal places (e.g., 32.1616).)

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