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..ll Orange JO 80% 3:02 PM Assignment 3 The University of Jordan/Aqaba Risks of International Finance First Semester 2020/2021 Assignment 3 6% Consider the following

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..ll Orange JO 80% 3:02 PM Assignment 3 The University of Jordan/Aqaba Risks of International Finance First Semester 2020/2021 Assignment 3 6% Consider the following information for the USA and Europe: USA Europe 1-year interest rate 4% 1-year expected inflation 2% 5% Current spot rate $1.13 1-year forward rate $1.10 A- Does covered interest rate parity (CIRP) hold? B- According to the purchasing power parity (PPP). what is the expected spot rate of the euro (SE) in 1 year? C- According to the uncovered interest rate parity (UIRP). what is the expected spot rate of the euro (se) in 1 year? D- What must the 1-year forward rate be so that covered interest arbitrage is not feasible

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