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The USD-EUR Spot Exchange Rate Is $1

question 1

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


Definitions:

Exchange Rate

The exchange rate of one currency in terms of another.

Units

Refers to individual items or components of a product, or measures of quantity in mathematics, science, and commerce.

Canadian Dollars

The currency in use in Canada, represented by the ISO code CAD.

Exchange Rates

Exchange Rates denote the value of one currency in terms of another currency. These rates fluctuate based on market conditions and are fundamental to international finance and trade.

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