Question: please answer no it doesnt please solve my question. you have wasted one of my twenty questions. Use the following information assuming that you are
please answer
no it doesnt please solve my question.
you have wasted one of my twenty questions.
Use the following information assuming that you are a US investor. Today's forward exchange rate: 1 euro - $1.28. US interest rate is 5%. EU interest rate is 12%. a) If the IRP (Interest rate parity) holds, what should the spot exchange rate be today? b) Assuming that today, you invest $500 in the EU market for one year and at the same time, enter a currency forward contract to sell euro in a year. If today's spot exchange rate is: 1 euro=$1.32, show how much profits or losses you make next year
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