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4) Suppose that the one-year interest rate is 5.0 percent in the United States; the spot exchange rate is $1.20/; and the one-year forward exchange

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4) Suppose that the one-year interest rate is 5.0 percent in the United States; the spot exchange rate is $1.20/; and the one-year forward exchange rate is $1.16/. What must the one-year interest rate be in the euro zone to avoid arbitrage? A) 5.0% B) 8.62% C) 6.09% D) none of the options

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