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Assume that you are a foreign exchange trader in the US, and that interest rate parity holds. Fill in the blanks below. Hint: use the

Assume that you are a foreign exchange trader in the US, and that interest rate parity holds. Fill in the blanks below. Hint: use the formula for the interest parity condition presented in Ch. 3. Important: Round off your answers to two decimal places (e.g. 0.02, 1.00, etc.) Failure to round off correctly may result in Canvas marking your answer wrong.

Case

Today's Dollar/Euro Exchange Rate (E$/)

Expected Dollar/Euro Exchange Rate (Ee$/)

Interest Rate on Euro Deposits (R )

Interest Rate on US Deposits (R$)

A

1.00

1.10

0.05

?

B

1.00

?

0.07

0.07

C

0.80

0.88

?

0.13

D

?

1.20

0.01

0.21

E

1.50

1.35

0.11

?

F

0.90

0.94

?

0.06

G

0.50

?

0.02

0.12

H

1.00

1.02

-0.01

?

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