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Answer questions 8 through 12 based on the following information The 12-month interest rate on dollar-denominated assets (like bank deposits) is 2.00%. The 12- month

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Answer questions 8 through 12 based on the following information The 12-month interest rate on dollar-denominated assets (like bank deposits) is 2.00%. The 12- month interest rate on euro denominated assets is 4.50%. The current spot exchange rate is $1.15 per euro. The current forward exchange rate is S1.05 per euro. You have an initial dollar fund of $100,000. Suppose that you decide to invest your dollar fund in euro-denominated assets while also using the forward exchange market to hedge against the exchange risk. contract to sell the foreign change ofasedo quoted today A) 92,750.25 bilions; the forward exchange rate B) 90,863.57; the forwrd ehange rhte C) 689,925.93; the spot exchange rate D) none of the abowe 9. From the covered interest arbitrage, your dollar fand will change to a certain amount equal to in 12 months. A) $93,896.78 B) 804,791.25 C) $95,413.04 D) none of the above 10. From the covered interest arbitrage, the dollar-denominated rate of return on your euro depceits is about equal to within 12 months. A) 4.50% B)-3.35% C)-4.59% D) none of the above 13 11. From the covered interest arbitrage, the euro-denominated rate of return on your is about equal to within 12 months. A) 4,50% B)-3.35% C)-4.59% D) none of the above 12. Given the international finance data, it can be verified that A)i-$(1 + i*) and i=+7 D) none of the above

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