Question

According to the Interest Rate Parity (IR

  • P  theory, if the 1-year risk-free interest rate in India is 10% and the 1-year risk-free interest rate in the USA is 4%, and the current Spot Rate is ₹83/USD, what should be the 1-year Forward Rate?
A ₹78.50 (Forward Discount)
B ₹83.00 (No change)
C ₹87.80 (Forward Premium)
D ₹91.30 (Forward Premium)
E ₹85.50 (Forward Premium)
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