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Suppose that the one - year interest rate is 5 . 0 percent in the United States and 3 . 5 percent in Germany, and
Suppose that the oneyear interest rate is percent in the United States and percent in Germany, and that the spot exchange rate is $ and the oneyear forward exchange rate, is $ Assume that al of these rates will be used and a speculator can borrow $ or
This is an example whether Uncovered Interest Arbitrage is possible
This is an example of whether Purchasing Power Parity holds
This is an example whether fisher effect holds
None of the above
This is an example whether Covered Interest Arbitrage is possibleC
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