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7. Suppose the following were true: U.S Dollar Euro 12 month interest 2.25% 2.70% rate Spot rate(3months) 11.2017 $/ Forward 1.19854 $/ rate(3months) (1) Does

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7. Suppose the following were true: U.S Dollar Euro 12 month interest 2.25% 2.70% rate Spot rate(3months) 11.2017 $/ Forward 1.19854 $/ rate(3months) (1) Does interest rate parity hold? (2) Which way will funds flow? (3) How will this affect exchange rates

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