Consider That the One-Year Euro Interest Rate Is Greater Than

Multiple Choice

Consider that the one-year Euro interest rate is greater than the US one-year interest rate.How does the one-year forward exchange rate (USD per EUR) compare to the spot exchange rate (USD per EUR) ?

A) The forward rate is larger than the spot rate
B) The forward rate is smaller than the spot rate
C) The forward rate is equal to the spot rate
D) There is not enough information to answer this question