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Suppose that the annual interest rate is 5% in the US and 2% in Germany, and that the spot exchange rate is $1.2/euro and the

Suppose that the annual interest rate is 5% in the US and 2% in Germany, and that the spot exchange rate is $1.2/euro and the forward exchange rate, with one-year maturity, is $1.3/euro. If an equilib...

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