Assume the current EUR/USD spot rate is 1.1005 and the 6-month forward exchange rate is EUR/USD 1.1048. The 6-month nominal interest rate in the Eurozone is 0.50% p.a. Expected inflation in the U.S. over the next 6 months is 1% p.a. According to exact parity conditions, what is the 6-month real interest rate (p.a.) in the U.S.?

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To calculate the 6month real interest rate in the US we need to consider the nom... View the full answer