On January 1st, 2019, the dollar was worth 1.147. If one-year German bunds are yielding 0.55% and

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On January 1st, 2019, the dollar was worth €1.147. If one-year German bunds are yielding −0.55% and one-year U.S. Treasury bonds are yielding 2.55%, at what end-ofyear exchange rate will the dollar returns on the two bonds be equal? What amount of euro appreciation or depreciation does this equilibrating exchange rate represent?

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Multinational Financial Management

ISBN: 9781119559900

11th Edition

Authors: Alan C Shapiro, Paul Hanouna

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