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Suppose the 1-year risk-free rate of return in the United States is 6.0% and the 1-year risk-free rate of return in Britain is 82%. The
Suppose the 1-year risk-free rate of return in the United States is 6.0% and the 1-year risk-free rate of return in Britain is 82%. The current exchange rate is $1-0.54. A 1-year future exchange rate of would make a U.S. investor indifferent between investing in the U.S. security and investing in the British security 0.5512 0.5228 0.5519 0.5492
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