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Problem 7 Intro The current exchange rate between the dollar and euro is 1.1 dollars per euro. The nominal risk-free rate is 1.2% in
Problem 7 Intro The current exchange rate between the dollar and euro is 1.1 dollars per euro. The nominal risk-free rate is 1.2% in the US and 0.8% in Europe. Part 1 Attempt 1/10 for 10 pts. What should be the 1-year forward rate (in dollars per euro) according to covered interest parity? 2+ decimals Submit Problem 8 Intro Two identical cars cost $21,000 in the US and 330,000 pesos in Mexico. Part 1 Attempt 1/10 for 10 pts. If purchasing power parity holds, what should be the spot exchange rate in dollars per peso? 3+ decimals Submit Problem 9 Intro Assume Facebook borrowed 70 million from an Irish bank to build a datacenter in Dublin. When the money was lent, the exchange rate was 1.34 dollars per euro, but has now changed to 1.25 dollars per euro. Part 1 Attempt 1/10 for 10 pts. Assuming that most of Facebook's shareholders live in the U.S.A., what was Facebook's profit or loss as the result of the change in the exchange rate? Enter profits as positive numbers and losses as negative numbers. 0+ decimals Submit
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