What is the effective forward rate

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An importer of grain into Germany from the United States has payables due in 90 days.

The spot rate is $1.15 per euro. The interest rate in Germany is 2% p. a. and the interest rate in the U. S. is 4% p.a.

If a money market hedge is to be used what is the effective forward rate? (The interest rates for 90 days will be 0.5% in Germany and 1% in the U. S.)

Reference no: EM131926495

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