Question: Using the uncovered interest parity equation with approximation to determine the spot exchange rate, assume that the expected spot rate (after 1 year) for euros

Using the uncovered interest parity equation with approximation to determine the spot exchange rate, assume that the expected spot rate (after 1 year) for euros (in terms of dollars) = $1.03, the current interest rate on euro deposits is 3.0%, and the current interest rate on dollar deposits is 6.0%. What current spot rate would satisfy the equation?

A) $1.06 per euro

B) $1.03 per euro

C) $1.00 per euro

D) $0.94 per euro

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