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Q4 (20 points): Assume that the euro interest rate is constant at 5 percent, and that the expected exchange rate is 1.05 dollars per one
Q4 (20 points): Assume that the euro interest rate is constant at 5 percent, and that the expected exchange rate is 1.05 dollars per one euro. Find the expected dollar return on euro deposits for the following cases. is (Ese - Esse) Ese Interest rate on dollar deposits Dollar rate of return on dollar deposits Interest rate on euro deposits Expected rate of depreciation of the dollar Expected dollar rate of return on euro deposits Expected Dollar Depreciation Rate Against Euro (1.05 - EVE Expected Dollar Return on Euro Deposits Re+(1.05 - EVE Case Rate Today's Interest Dollar/EuroR ate on Exchange Euro Deposits 1.07 1.06 1.05 1.04 1.03 1.02 1.01 0.99 0.98
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