Question
1. Suppose that the one-year forward dollar price of a euro is $1.34. Further, assume that the spot exchange rate is $1.35 per euro, and
1.
Suppose that the one-year forward dollar price of a euro is $1.34. Further, assume that the spot exchange rate is $1.35 per euro, and that the interest rate on dollar deposits is 4 percent.What is the interest rate on Euro deposits that would make interest parity hold?
Round to two decimal places.Enter a number like 2% as "2.00" and not "0.02."Note: you may end with a number that doesn't seem "realistic" and that's OK for the purposes of this question.
2.
Assume the U.S. interest rate is 6.1 percent, and the interest rate on euro deposits is 5.2 percent. If the Dollar price of a Euro is $1.01, what is the forward exchange rate dollar price of a Euro?$___ (round tothreedecimal places)
3.
Suppose that last year, the 12-month interest rates for the Australia and the Greece are 2% and 5.1% respectively, and that the Australian dollar price of a euro is $1.41. Given this information, what was the percentage change in the exchange rate over the year?
Round to two decimal places.Enter a number like 2% as "2.00" and not "0.02."
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