Suppose You Observe a Spot Exchange Rate of $1

question 84

Multiple Choice

Suppose you observe a spot exchange rate of $1.0500/€.If interest rates are 5% APR in the U.S.and 3% APR in the euro zone,what is the no-arbitrage 1-year forward rate?

• A)€1.0704/$
• B)$1.0704/€
• C)€1.0300/$
• D)$1.0300/€

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Definitions:

Securities Violations

Illegal practices in the trading or issuing of stocks and bonds which include insider trading, fraud, and misrepresentation.

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An action done intentionally or with reckless disregard for the consequences, often used in legal contexts to denote deliberate misconduct.

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