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QUESTION
Suppose that the one-year interest rate is 3.50% in the United States, the spot exchange rate is $1.2436/1.00, and the one-year forward exchange rate...
Suppose that the one-year interest rate is 3.50% in the United States, the spot exchange rate is $1.2436/€1.00, and the one-year forward exchange rate is $1.2738/€1.00. Based on interest rate parity, what must the one-year interest rate be in the euro zone?
