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Economics
Economics
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The current spot exchange rate is 1.2500 USD/EUR. The 1-year risk-free rate in the US is 5.0% and in the Eurozone is 2.5%. According to covered interest rate parity, what should the 1-year forward rate (USD/EUR) be?
A
1.2805 USD/EUR
B
1.2195 USD/EUR
C
1.2500 USD/EUR
D
1.3125 USD/EUR
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Tags
#covered-interest-parity
#forward-rates
#exchange-rates
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