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Suppose that the one-year interest rate is 4.30% in Italy, the spot exchange rate is $1.5550/€1.00,...

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Finance

Suppose that the one-year interest rate is 4.30% in Italy, thespot exchange rate is $1.5550/€1.00, and the one-year forwardexchange rate is $1.5979/€1.00. Based on interest rate parity, whatmust the one-year interest rate be in the United States?

Question 19 options:

1.832%

1.935%

1.500%

7.177%

1.478%

2.685%

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Transcribed Image Text

Suppose that the one-year interest rate is 4.30% in Italy, thespot exchange rate is $1.5550/€1.00, and the one-year forwardexchange rate is $1.5979/€1.00. Based on interest rate parity, whatmust the one-year interest rate be in the United States?Question 19 options:1.832%1.935%1.500%7.177%1.478%2.685%

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