This is the question:
The spot exchange rate for United States dollars per United Kingdom pound (USD/GBP) is
1.5775. If 30-day interest rates are 1.5% in the United States and 2.5% in the United
Kingdom, and interest rate parity holds, the 30-day forward USD/GBP exchange rate should
be:
A) 1.5621.
B) 1.5762.
C) 1.5788.
According to the text the answer is B, for the following procedure: Forward USD/GBP = spot USD/GBP × (1 + U.S. interest rate) / (1 + UK interest rate)
= 1.5775 × [(1 + 0.015/12) / (1 + 0.025/12)]
= 1.5762
But why divide the interest rate by 12 if the text mentions “If 30-day interest rates are 1.5%” , so I consider that the rate has monthly periodicity. I’m confused.