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What is the forward rate premium or discount percent

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Suppose 90-day investments in Europe have a 5% annualized return and a 1.25% quarterly (90-day) return. In the U.S., 90-day investments of similar risk have a 7% annualized return and a 1.75% quarterly (90-day) return. In today's 90-day forward market, 1€ (euro) equals $1.32. If interest rate parity holds, What is the forward rate premium or discount percent?

Reference no: EM133058238

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