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Suppose that the one-year interest rate is 3.85% in the United States, the spot exchange rate is $1.3669/1.00, and the one-year forward exchange rate is

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Suppose that the one-year interest rate is 3.85% in the United States, the spot exchange rate is $1.3669/1.00, and the one-year forward exchange rate is $1.3934/1.00. Based on interest rate parity, what must the one- year interest rate be in the euro zone? 1.939% 3.394% 2.719% 1.875% 5.863% 1.840%

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