What Is a Currency Forward?
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The following graph plots the forward premium for a foreign currency along the horizontal axis, while measuring the interest rate differential (betweena home country and a foreign country) along the vertical axis. in refers to the interest rate in the home country, while if refers to the interest rate in aforeign country.On the following graph, use the blue line (circle symbol) to plot the combinations of the forward premium and interest rate differential that areconsistent with interest rate pa
The following graph plots the forward premium for a foreign cur…
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