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Assume that annual interest rates in the united states are 4 percent

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June 7th, 2024

Assume that annual interest rates in the united states are 4 percent, while interest rates in france are 6 percent.A. According to IRP, what should the forward rate premium or discoun of the euro be ?B. If the euro’s spot rate is $1.10, what should the 1-year forward rate of the euro be ? Explain.

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