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1) Assume the following values for the Canadian interest rate, the (new) euro interest rate, and the (new) expected value of the dollar/euro exchange rate:
1) Assume the following values for the Canadian interest rate, the (new) euro interest rate, and the (new) expected value of the dollar/euro exchange rate: R5 = 0.02; R2 = 0.04; E2$f= 1.4938 The value (rounded to 3 decimal places) of the dollar/euro exchange rate (Ezsxe) which is now consistent with foreign exchange (FX) market equilibrium equals I In the space below clearly show your method of calculation. (4 marks)
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