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Suppose that the interest rate of government bonds in the Euro Area at 1 year maturity...

Suppose that the interest rate of government bonds in the Euro Area at 1 year maturity is 10%, or i€ =0.10 At the same time , the interest rate of government bonds in the USA at 1 year maturity is 5%, or i$=0.05 Suppose that the spot exchange rate between Euro € and US Dollar $ is, in US Dollars, 1€=$1.37 The Forward Rate - according to the Covered Interest Parity - is...

Selling at Forward Discount

None of the above

Selling at Forward Premium

Equal to the Spot Rate

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