Question: need help with both please. Question 20 (4 points) Suppose that the one-year interest rate is 6.62% in the United States, the spot exchange rate

need help with both please. need help with both please. Question 20 (4 points) Suppose that the

Question 20 (4 points) Suppose that the one-year interest rate is 6.62% in the United States, the spot exchange rate is $1.1776/1.00, and the one-year forward exchange rate is $1.1528/1.00. Based on interest rate parity, what must the one- year interest rate be in the euro zone? 8.184% 2.151% 06.141% 11.677% 8.914% 4.375% Question 21 (4 points) Suppose that the one-year interest rate is 5.42% in the United States, the spot exchange rate is $1.3037/1.00, and the one-year forward exchange rate is $1.2665/1.00. Based on interest rate parity, what must the one- year interest rate be in the euro zone? 5.503% 11.411% 8.516% 2.412%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!