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The following information is available for the Canada and the eurozone: Canada Europe Expected inflation 6% 12% Spot rate ----- $1.4653 One-year forward rate -----

The following information is available for the Canada and the eurozone: Canada Europe Expected inflation 6% 12% Spot rate ----- $1.4653 One-year forward rate ----- $1.3895 a. According to PPP, what is the expected spot rate of the euro in one year? b. If you have to pay EUR 1,000,000 in one year to a supplier in Germany, will you hedge at the forward rate? Why

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