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QUESTION
Suppose that the one-year interest rate is 4.71% in the United States and 4.17% in Germany. The spot exchange rate is $1.3954/1.
Suppose that the one-year interest rate is 4.71% in the United States and 4.17% in Germany. The spot exchange rate is $1.3954/€1.00. What should the one-year forward rate be to preclude arbitrage profits?
