2. If the euro interest rate is 6%, and the expected exchange rate is 1.06 USD per one euro. With different current Dollar/Euro exchange rate: 1.08, 1.09, 1.10, please calculate the expected dollar return on euro deposits and make analysis how to make investment decision under the above three current exchange rates? (The formula for reference: Expected Dollar Return on Euro Deposits: Re+(1.06-E)/E) Production per unit of Labor: Columbia United States Computer 30 150 Beef 40 80
2. If the euro interest rate is 6%, and the expected exchange rate is 1.06 USD per one euro. With different current Dollar/Euro exchange rate: 1.08, 1.09, 1.10, please calculate the expected dollar return on euro deposits and make analysis how to make investment decision under the above three current exchange rates? (The formula for reference: Expected Dollar Return on Euro Deposits: Re+(1.06-E)/E) Production per unit of Labor: Columbia United States Computer 30 150 Beef 40 80
Chapter5: Currency Derivatives
Section: Chapter Questions
Problem 28QA
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Transcribed Image Text:2. If the euro interest rate is 6%, and the expected
exchange rate is 1.06 USD per one euro. With different
current Dollar/Euro exchange rate: 1.08, 1.09, 1.10,
please calculate the expected dollar return on euro
deposits and make analysis how to make investment
decision under the above three current exchange
rates? (The formula for reference: Expected Dollar
Return on Euro Deposits: Re+(1.06-E)/E)
Production per unit of Labor:
Columbia
United States
Computer
30
150
Beef
40
80
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