The foreign exchange market and the money market the market, Business Economics

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The foreign exchange market and the money market the market

The foreign exchange market and the money market (the market in which you can borrow or lend in USD or Euro) are very efficient: so there is no room for arbitrage. The spot exchange rate between USD and Euro as of today is $0.9/Euro. The one-year interest rate is 6% for USD, and 3% for Euro. Please estimate today’s one-year forward exchange rate between the USD and the Euro, using CIA parity condition.

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Business Economics: The foreign exchange market and the money market the market

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Business Economics: The foreign exchange market and the money market the market

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