Question 1 of 36

Specimen exam

Q1 Section A

2 marks

The home currency of Acaba 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?

Pick 1 option