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What is the interest rate

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Question - In the spot market P1 U.S. equals 1.85 Brazilian real, and in the 1-year forward market 1 U.S. peso equals 1.98 real. Interest rates on 1-year, risk-free securities are 4.8 percent in the United States. If interest rate parity holds, what is the interest rate on 1-year, risk-free Brazilian securities?

a. 2.13%

b. 12.14%

c. 28.61%

d. 26.05%

e. 7.03%

Reference no: EM133077204

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