Question: Please provide solution Suppose the current USD/EUR spot exchange rate is 1.20$/. At the same the euro interest rate amount to 10% per year while

Please provide solution Please provide solution Suppose the current USD/EUR spot exchange rate is 1.20$/.

Suppose the current USD/EUR spot exchange rate is 1.20$/. At the same the euro interest rate amount to 10% per year while the dollar interest rate is 0% per year. a. What is the no-arbitrage one-year USD/EUR forward exchange? b. Suppose the one-year USD/EUR forward exchange was 1.25$/. How could you make money from this situation

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