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Suppose U.S. interest rates are 10%, European interest rates are 7%, and the current spot rate is 1 Euro = 1.19 US Dollars. According to
Suppose U.S. interest rates are 10%, European interest rates are 7%, and the current spot rate is 1 Euro = 1.19 US Dollars. According to interest rate parity, what is the equilibrium forward rate (in other words, based on the forward rate, how many US dollars will 1 Euro be worth in the future)? Give your answer to four decimal places (for example if 1 Euro will be worth 1.5555 US Dollars, write your answer as 1.5555)
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