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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. 11. From the covered interest arbitrage, the euro-denominated rate of return on your euro de 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) ii) andiR+ B)i>(1 + i") + i. C)

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