The current USD/euro exchange rate is 1.127 dollar per euro. The six month forward exchange rate is 1.117. The six month USD interest rate is 1.41% per annum continuously compounded. Estimate the six month euro interest rate (in percent). Use three decimal places for your answer.

The current USD/euro exchange rate is 1.127 dollar per euro. The six month forward exchange rate is 1.117. The six month USD interest rate is 1.41% per annum continuously compounded. Estimate the six month euro interest rate (in percent). Use three decimal places for your answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The current USD/euro exchange rate is
1.127 dollar per euro. The six month
forward exchange rate is 1.117. The six
month USD interest rate is 1.41% per
annum continuously compounded.
Estimate the six month euro interest rate
(in percent). Use three decimal places for
your answer.
answer: 3.193

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