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Suppose that the one-year interest rate is 5.42% in the United States, the spot exchange rate is $1.3037/1.00, and the one-year forward exchange rate is
Suppose that the one-year interest rate is 5.42% in the United States, the spot exchange rate is $1.3037/1.00, and the one-year forward exchange rate is $1.2665/E1,00. Based on interest rate parity, what must the oneyear interest rate be in the euro zone? 5.503% 11.411% 8.516% 2.412% 7.848% 2.937%
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