Question: please answer 9. (2 points) What is the expected dollar rate of return on euro deposits if today's exchange rate is $1.20 per euro, next

please answer

9. (2 points) What is the expected dollar rate of return on euro deposits if today's exchange rate is $1.20 per euro, next year's expected exchange rate is $1.212 per euro, the dollar interest rate is 6%, and the euro interest rate is 4%?" a. What is the expected dollar rate of return on euro deposits? b. Does IP hold in this example? c. What would happen to the S/E exchange rate? Will the euro appreciate or depreciate? How much? d. Calculate the equilibrium S/E exchange rate assuming all other variables remain constant

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