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Suppose you observe a spot exchange rate of $ 1 . 5 0 / . If interest rates are 3 % APR in the U

Suppose you observe a spot exchange rate of $

1.50 / .

If interest rates are

3 %

APR in the U

.

.

and

5 %

APR in the euro zone, what is the no

-

arbitrage

1 -

year forward rate?

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