A US company wants to arrange a forward contract to buy euros in year. The interest rates for investments in US dollars and euros are 3% and 4%, respectively. The current exchange rate is 0.79 euros to a dollar. What is the forward exchange rate?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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Chapter6: Managing In The Global Economy
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3.
A US company wants to arrange a forward contract to buy euros in year. The
interest rates for investments in US dollars and euros are 3% and 4%, respectively. The
current exchange rate is 0.79 euros to a dollar. What is the forward exchange rate?
Transcribed Image Text:3. A US company wants to arrange a forward contract to buy euros in year. The interest rates for investments in US dollars and euros are 3% and 4%, respectively. The current exchange rate is 0.79 euros to a dollar. What is the forward exchange rate?
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