Question: S0 = $1.2158/ S0 = 0.7378/$ S0 = $1.3554/ E (S1 (3-months)) = $1.2640/ F3-months = $1.1880/ Where: = euro; = British pound; E (

S0 = $1.2158/ S0 = 0.7378/$ S0 = $1.3554/ E (S1 (3-months)) = $1.2640/ F3-months = $1.1880/ Where: = euro; = British pound; E ( ) = Expected.

Is the dollar expected to appreciate or depreciate in the coming three-month period against the euro? Explain your answer without calculations. Now, calculate the expected rate of appreciation or depreciation in the value of the dollar over the coming three-month period. Give your answer in percent with four decimal places

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