Question: Question 32 (7 points) Suppose that the interest rate is 7 percent on euro-denominated assets of a one year maturity and 5 percent on dollar-denominated

Question 32 (7 points) Suppose that the interest rate is 7 percent on euro-denominated assets of a one year maturity and 5 percent on dollar-denominated assets of a one-year maturity, and the current spot exchange rate for the euro in terms of dollars is $1.50/E. If the dollar is expected to appreciate at a 4 percent rate, what is the rate of return that a French investor can expect to earn on a dollar-denominated assets? 3% 1% O 5% 11%

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