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What must the forward rate be for covered interest parity

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Reference no: EM132634884

Problem 1: Suppose the interest rate in the US is 2.5%. The current spot rate of dollars per euro E$/€ is 1.2. The interest rate in the eurozone is 1%. What must the forward rate F$/€ be for covered interest parity to hold?

Option 1: 1.2567

Option 2: 1.1189

Option 3: 1.2178

Option 4: 1.3428

Option 5: 1.3123

Reference no: EM132634884

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