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1) The current USD/EUR exchange rate is 1.4300 dollar per EUR. The 12 month forward exchange rate is 1.3900. The 12-month USD interest rate is
1) The current USD/EUR exchange rate is 1.4300 dollar per EUR. The 12 month forward exchange rate is 1.3900. The 12-month USD interest rate is 7.50% per annum continuously compounded. Estimate the 12-month EUR interest rate.
2) The spot price of silver is $17.50 per ounce. The storage costs are proportional and equal to 2.05% per ounce per annum continuously compounded. Assuming that interest rates are 8.25% per annum for all maturities, calculate the futures price of silver for delivery in 4 months.
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