Estimate the six-month euro interest rate


Problem:

The current UDS/euro exchange rate is 1.4000 dollar per Euro. The six-month forward exchange rate is 1.3950. The six-month USD interest rate is 1% per annum continuously compounded.

Required:

Question: Estimate the six-month euro interest rate.

Note: Provide support for rationale.

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Accounting Basics: Estimate the six-month euro interest rate
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