Assume that the us one-year interest rate is 5 and the, Ask an Expert

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Assume that the U.S. one-year interest rate is 5% and the one-year interest rate on euros is 8%. You have $100,000 to invest and you believe that the international Fisher effect (IFE) holds. The euro's spot exchange rate is $1.40. What will be the yield on your investment if you invest in euros?

a. 8%

b. 5%

c. 3%

d. 2.78%

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92319535

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