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What should be the forward rate of a contract

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Reference no: EM132558567

Its January 10, the spot rate for U.S. dollars ($) expressed in euros (€) was $0.7873/€. The U.S. interest rate (compounded semiannually) was 5.36 percent, whereas the euro interest rate (compounded semiannually) was 3.11 percent. From a European perspective, what should be the forward rate of a contract that expires August 10? Why?

Reference no: EM132558567

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