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# 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

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? Need to know how the calculation is done step by step.

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SOLUTION:
Forward Rate = Spot Rate * e^(Domestic Rate - Foreign Rate) * Domestic Rate
Forward Rate = 0.7 * e^((0.05 - 0.07) * 0.05)
Forward Rate = 0.7 * e^-0.001
Forward Rate = 0.7 * 0.99
Forward...

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