Assume the following information is available for the United States and Europe: a. Does IRP hold? b.

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Assume the following information is available for the United States and Europe:

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a. Does IRP hold?

b. According to PPP, what is the expected spot rate of the euro in 1 year?

c. According to the IFE, what is the expected spot rate of the euro in 1 year?

d. Reconcile your answers to parts

(a) and (c).

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