What must the current spot rate ea-b be

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Problem 1: Suppose that interest rates in country A are 10.0%, while interest rates in country B are 12.0%. Furthermore, currency traders expect that the spot rate one year from now will be 88 units of currency A per unit of currency B (a.k.a. EeA/B = 88). What must the current spot rate EA/B be if there are no arbitrage opportunities? Use the full UIP formula.

Reference no: EM132634890

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