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Suppose that the one-year interest rate on a US deposit is 8% and the interest rate on a EU deposit is 10%. If the spot
Suppose that the one-year interest rate on a US deposit is 8% and the interest rate on a EU deposit is 10%.
- If the spot rate is USD 1.30/EUR, then what should you expect the exchange rate between USD and EUR to be a year from now if you are indifferent between the EU and the US deposit?
- What is the expected rate of appreciation/depreciation? (You may assume that you have $100 to invest).
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Intermediate Financial Management
Authors: Eugene BrighamPhillip Daves
1st Edition
0324594712, 9780324594713
