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8. Assume that the Eurozone risk-free interest rate on bonds with one year to maturity is 4.78 percent and the U.S. risk-free interest rate on
8. Assume that the Eurozone risk-free interest rate on bonds with one year to maturity is 4.78 percent and the U.S. risk-free interest rate on one-year bonds is 3.15 percent. The current exchange rate is $0.90 per euro. Assume that the United States is the domestic country. a. Calculate the one-year forward exchange rate. b. Is the euro trading at forward premium or discount? c. Is your answer to part (b) consistent with interest rate parity? Explain
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