Question: 4. Suppose the same information as in question 3. Now suppose you want to buy a Euro forward but cannot find a counterparty who is

4. Suppose the same information as in question 3. Now suppose you want to buy a Euro forward but cannot find a counterparty who is willing to sell one. If you can borrow and lend in both currencies at the interest rates listed in question 3, describe the transactions you would take to synthesize a Euro forward.

question 3 below

. Suppose the current exchange rate is 1.320 dollars per euro, the continuously compounded dollar interest rate is 3%, and the continuously compounded Euro interest rate is 1%. What is the one year Euro forward rate?

answer to question 3 = $1.35/Euro

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