Question: Suppose that the current spot exchange rate is 0 , 8 0 / S and the three - month forward exchange rate is 0 .
Suppose that the current spot exchange rate is S and the threemonth forward exchange rate is S The threemonth interest rate is percent per annum in the United States and percent per annum in France. Which of the following is going to happen as a result of covered arbitrage activities toward restoring the interest parity condition? The dollar interest rate will fall The euro interest rate will fall The S forward exchange rate will fall The S spot exchange rate will rise
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