Answer: 283.322 HUF
Explanation:
Following the information given in the question, the following can be deduced:
Spot rate = 267.767
Foreign currency interest rate (rf) = 1.6%
Home currency interest rate (rh) = 3.5%
Number of years (n) = 3
Therefore, the expected exchange rate 3 years from now will be calculated as:
= Spot × (1+(rh - rf))^n
= 267.767 × [1 + (35% - 16%)]³
= 267.767 × [1 + (0.035 - 0.016)]³
= 267.767 × 1.0581
= 283.322 HUF
Therefore, the expected exchange rate 3 years from now will be 283.322 HUF.
