If the Current Spot Exchange Rate on the Euro Is

question 77

Multiple Choice

If the current spot exchange rate on the Euro is $1.2812/€ and the two year risk free rate for borrowing in dollars is 3% and 4% for borrowing in Euros,what should be the two year $/€ forward exchange rate?

• A) 1.2689
• B) 1.2812
• C) 1.2567
• D) 1.2469

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Definitions:

Treatments

Specific conditions applied to the participants or subjects in an experimental study.

Total

The sum of all values in a set of numbers.

Null Hypothesis

The default hypothesis that there is no significant difference or effect, serving as a starting point for statistical hypothesis testing.

P-value

The probability of observing test results at least as extreme as the results actually observed, under the assumption that the null hypothesis is correct.