An exchange rate is 0.7000 and the six-month domestic and foreign risk-free interest rates are 5% and 7% (both expressed with continuous compounding). What is the six-month forward rate?
A. 0.7070
B. 0.7177
C. 0.7249
D. 0.6930
D
The six-month forward rate is 0.7000e?(0.05?0.07)×0.5=0.6930 .
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