Question: S0 = $1.2314/ S0 = 0.9278/$ S0 = $1.0778/ E (S1 (3-months)) = $1.1980/ F3-months = $1.2680/ Where: = euro; = British pound; E (

S0 = $1.2314/ S0 = 0.9278/$ S0 = $1.0778/

E (S1 (3-months)) = $1.1980/ F3-months = $1.2680/

Where: = euro; = British pound; E ( ) = Expected. spot rate for the pound at the end of the three-month period is $1.2680/ + $0.0366/ = $1.3046/

If one year ago the spot price of euro in terms of the $ was $1.1562/. Do you think the euro has appreciated or depreciated against the dollar over the last year (explain answer without any calculations)? What was the percentage rate of change in the value of the euro over the last year? Is your numerical answer consistent with your explanation?

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