Based on the exchange rate of dollar/euro, and the interests of US and the Euro Zone...
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Based on the exchange rate of dollar/euro, and the interests of US and the Euro Zone Euros Exchange rate per euro today Exchange rate per euro 1 year later Interest Rate Exchange Rate $ 1.02 $ 1.05 Europe US 1% 5% Please ANSWER: does the interest rate parity holds? If not, what actions would be taken by international investors and what will happen to the exchange rate in the future and interest rate of the two places? (10 points) Based on the exchange rate of dollar/euro, and the interests of US and the Euro Zone Euros Exchange rate per euro today Exchange rate per euro 1 year later Interest Rate Exchange Rate $ 1.02 $ 1.05 Europe US 1% 5% Please ANSWER: does the interest rate parity holds? If not, what actions would be taken by international investors and what will happen to the exchange rate in the future and interest rate of the two places? (10 points)
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Apply the interest rate parity formula to determine the forward exchange rate The forward exchange r... View the full answer
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