assume that the one$-$year interest rate is $4\mathrm{.}0$ percent in the united states; the spot exchange rate is $$1\mathrm{.}25/$euro$,$ and the one$-$year forward exchange rate is $$1\mathrm{.}16/$euro$.$ what must the one$-$year interest rate be in the euro$-$zone to avoid arbitrage?

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To determine the required oneyear interest rate in the Eurozone to avoid arbitrage we can use the co... View the full answer