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Suppose That the One-Year Interest Rate Is 5

question 1

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Suppose that the one-year interest rate is 5.0 percent in the United States; the spot exchange rate is $1.20/€; and the one-year forward exchange rate is $1.16/€. What must one-year interest rate be in the euro zone to avoid arbitrage?


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In baseball, a ball hit outside the field of play boundaries, not counting as a strike unless there are less than two strikes.

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