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As of today, the spot exchange rate is 1.00 = $1.50 and the rates of inflation expected to prevail for the next year in the

As of today, the spot exchange rate is 1.00 = $1.50 and the rates of inflation expected to prevail for the next year in the U.S. is 2 percent and 3 percent in the euro zone. What is the one-year forward rate that should prevail?

a.

1.00 = $1.5147

b.

1.00 = $1.4854

c.

1.00 = $0.6602

d.

$1.00 = 0.6602

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