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

Answer rating: 100% (QA)

ANSWER we can calculate the implied interest rate in the euro zone to avoid arbitrage given the following information US interest rate domestic 40 Spo... View the full answer