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3.(25%) Please prove the formula: F-S= id-ir Pd-Pf S (1+i) (1+P) Let id: domestic interest rate. if: foreign interest rate. Pa and P: growth rates

3.(25%) Please prove the formula: F-S= id-ir Pd-Pf S (1+i) (1+P) Let id: domestic interest rate. if: foreign interest rate. Pa and P: growth rates of domestic and foreign price levels. F and S present the forward exchange rate and spot rate

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