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:

Direct Expenses

Costs that can be directly attributed to the production of specific goods or services.

Building Cost

The total expenses involved in constructing a building, including material, labor, and other direct and indirect costs.

Allocated

The process of assigning or distributing resources or expenses to various accounts or periods.

Square Feet

A unit of area measurement equivalent to a square measuring one foot on each side, commonly used in measuring real estate and building spaces.