The current exchange rate between the euro and US dollar is USD/EUR1.025. Risk-free interest rates for one
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The current exchange rate between the euro and US dollar is USD/EUR1.025. Risk-free interest rates for one year are 0.75 percent for the euro and 3.25 percent for the US dollar. The one-year USD/EUR forward rate that best prevents arbitrage opportunities is:
A. USD/EUR1.051.
B. USD/EUR1.025.
C. USD/EUR0.975.
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