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Assume that relative to today, Dollar is expected to depreciate against the Euro by 10% in real terms over the next period. Assume further

Assume that relative to today, Dollar is expected to depreciate against the Euro by 10% in real terms over

Assume that relative to today, Dollar is expected to depreciate against the Euro by 10% in real terms over the next period. Assume further that the expected rates of inflation (over the next period) is 10% and 5% in Australia and Europe, respectively. If the real interest rate in Europe re = 5%, choose the correct option: A. The above information is not enough to calculate r B. rs = 10% C. rs = 20% D. rs = -5% E. rs = 15%

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