Suppose that the one-year interest rate is 5.0 percent in the United States; the spot exchange rate is $1.20/€; and the

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answerhappygod
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Suppose that the one-year interest rate is 5.0 percent in the United States; the spot exchange rate is $1.20/€; and the

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Suppose that the one-year interest rate is 5.0 percent in the United States; the spot exchange rate is $1.20/€; and the one-year forward exchange rate is $1.16/€. What must the 6-year interest rate be in the euro zone to avoid arbitrage? (Hint: Answer In decimals)
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