The euro is currently trading at 0.81 euros per dollar. The interest rate on the US Treasury Bill is 2.77% and the risk free interest rate in Europe is 2.26%. What is the arbitrage free future exchange rate between the euro and the U.S. dollar for one year in the future in euros per dollar?
The euro is currently trading at 0.81 euros per dollar. The interest rate on the US Treasury Bill is 2.77% and the risk free interest rate in Europe is 2.26%. What is the arbitrage free future exchange rate between the euro and the U.S. dollar for one year in the future in euros per dollar?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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