The USD-EUR Spot Exchange Rate Is $1

question 8

Multiple Choice

The USD-EUR spot exchange rate is $1.50/€. If the two-year interest rate (in continuously-compounded and annualized terms) is 3% for EUR and 2% for USD, what are the two-year forward points ($/€) expressed as usual in basis points?

• A) Zero
• B) 100
• C) 300
• D) Cannot be calculated from the given data.

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Definitions:

Dura Mater

The outermost, tough layer of the meninges that envelops the brain and spinal cord, providing protection.

Meninx

Meninx (plural, meninges) refers to one of the three membranes (the dura mater, arachnoid mater, and pia mater) that cover the brain and spinal cord.

Periosteum

The periosteum is a dense layer of vascular connective tissue enveloping the bones except at the surfaces of the joints, serving as a site for attachment for muscles and bones.

Nervous System

A complex network of nerves and cells that carry messages to and from the brain and spinal cord to various parts of the body.