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The USD/EUR spot exchange rate is 1.1 US Dollar per 1 Euro. The three-month US risk-free interest rate is 3%. The three-month Euro risk-free rate
The USD/EUR spot exchange rate is 1.1 US Dollar per 1 Euro. The three-month US risk-free interest rate is 3%. The three-month Euro risk-free rate is 1%. Both interest rates are expressed as effective annual rates . In the absence of arbitrage, what is the one-year USD/EUR forward rate?
1.1330 USD/EUR
1.1218 USD/EUR
1.0786 USD/EUR
1.1000 USD/EUR
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