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The one-year interest rate is 3% in the U.S. and 5% in the Eurozone. The spot exchange rate is $ 1.50/ while the forward exchange
- The one-year interest rate is 3% in the U.S. and 5% in the Eurozone. The spot exchange rate is $1.50/ while theforward exchange rate with one-year maturity is $1.35/.
- a) Figure out the one-year forward premium/discount for euro.
- b) What is the equilibrium one-year forward exchange rate (Please round the number to two decimals) based on Interest Rate Parity (IRP)?
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c) Given the difference between the forward market exchange rate and the equilibrium forward exchange rate, which currency you want to sell on the forward market? What about the spot market?
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E Marketing Theory And Application
Authors: Stephen Dann ,Susan Dann
2011 Edition
0230203965, 978-0230203969
