Multiple Choice
As of today,the spot exchange rate is €1.00 = $1.60 and the rates of inflation expected to prevail for the next year in the U.S.is 2% and 3% in the euro zone.What is the one-year forward rate that should prevail?
A) €1.00 = $1.6157
B) €1.6157 = $1.00
C) €1.00 = $1.5845
D) $1.00 * 1.03 = €1.60 * 1.02
Correct Answer:
Verified
Correct Answer:
Verified
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