A German supplier is offering two options to his American client to pay for an equipment: paying
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Question:
A German supplier is offering two options to his American client to pay for an equipment: paying 12,000 euros in 3 months or paying 15,000 dollars in 6 months. If the annual interest rate for the euro is 8% and for the dollar is 10%, what is the "implied" exchange rate? Hint: consider the present value of both currencies.
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