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The formal statement of IRP is F($;k)/S($k)=(1+i$)/(1+i_k). Suppose that the one-year interest rate in the US is 5.5%. The spot-exchange rate is $1.0585/, and the

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The formal statement of IRP is F($;k)/S($k)=(1+i$)/(1+i_k). Suppose that the one-year interest rate in the US is 5.5%. The spot-exchange rate is $1.0585/, and the one-year forward exchange rate $1.0777C. What must the one-vear interest rate be in the Euro zone to avoid arbitrage opportunities

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