Question: Suppose that the spot :$ is equal to 1.1795. The annual one-year interest rates on the Eurocurrency market are 4 percent in euros and 5

Suppose that the spot €:$ is equal to 1.1795. The annual one-year interest rates on the Eurocurrency market are 4 percent in euros and 5 percent in U.S. dollars. The annualized one-month interest rates are 3 percent in euros and 4 percent in U.S. dollars.
a. What is the one-year forward exchange rate?
b. What is the one-month forward exchange rate?

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