Question: The U. S. yield curve is flat at 5 percent and the euro yield curve is flat at 4 percent. The current exchange rate is

The U. S. yield curve is flat at 5 percent and the euro yield curve is flat at 4 percent. The current exchange rate is $ 1.20 per euro. What will be the swap rate on an agreement to exchange currency over a three- year period? The swap will call for the exchange of one million euros for a given number of dollars in each year.

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