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Assume that the following rates between the US dollar and the euro currently exist: - Spot exchange rate: Et=$0.95/; - 180-day forward exchange rate: Ft+1=$0.96/;

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Assume that the following rates between the US dollar and the euro currently exist: - Spot exchange rate: Et=$0.95/; - 180-day forward exchange rate: Ft+1=$0.96/; - Interest rate on 180-day US dollar-denominated bonds: it+1=5%. 7. Is the euro traded at a premium or at a discount? 8. Following Covered Interest Parity (CIP), what should be the interest rate on 180-day eurodenominated bonds it+1

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