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Suppose That the One-Year Interest Rate Is 4

Question 66

Multiple Choice

Suppose that the one-year interest rate is 4.0 percent in the Italy, the spot exchange rate is $1.60/€, and the one-year forward exchange rate is $1.58/€. What must one-year interest rate be in the United States?


A) 2%
B) 2.7%
C) 5.32%
D) None of the above

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