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a An investor has $1m to invest and has the option of placing it in a US bank account paying 4% annually, or in a

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a An investor has $1m to invest and has the option of placing it in a US bank account paying 4% annually, or in a German bank, where the annual rate of interest is only 3%. If the current exchange rate for the Euro is given as $1.2500, at what 1-year Dollar Euro forward rate of exchange would the investor be indifferent between where he/she invests? How did you arrive at your

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