Answer :
Then the forward exchange rate will be $1.43.
F = S * (1 + id) / ( 1 + if)
= $1.5 * (1 + 4%) / (1+ 9%)
= $1.43.
An exchange rate determines the price at which one value currency will be exchanged for another and has an impact on international trade and money transfers.
Both the value of the home currency and the value of the foreign currency have an impact on exchange rates. The rate at which one currency can be exchanged for another between countries or economic zones is known as an exchange rate. It is crucial in determining the dynamics of commerce and capital flow since it is used to calculate the worth of various currencies in comparison to one another.
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