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Suppose the current exchange rate between the Indian rupee (INR) and US dollar is 50 INR = 1USD. Suppose the annual nominal interest rate on

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Suppose the current exchange rate between the Indian rupee (INR) and US dollar is 50 INR = 1USD. Suppose the annual nominal interest rate on Indian securities is 5% and the nominal interest rate on US securities of similar risk and maturity is 3.5%. Then according to interest rate parity, the USD: O Will sell forward against the Indian rupee at approximately a 1.5% annual premium. O Will be more attractive to international investors because of the lower inflation. None of the above is correct. Will be less attractive to international investors because of the lower yield. Will sell forward against the Indian rupee at approximately a 1.5% annual discount

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