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# Assignment help 3146

Suppose that on January 1, 2018 you have \$8,000 which you wish to hold in an interest-bearing deposit for one year. One of your choices is to exchange \$8,000 for euros at the current exchange rate of E\$/€ = 1.60 and hold the proceeds of that exchange as a euro deposit earning interest at an annual rate of R = 0.01 (or 1%). Then on January 1, 2019 you plan to convert that euro deposit (principal plus interest) back into dollars at an expected exchange rate of Ee\$/€ = 1.64

a) Fill in the blanks in the following statements to compute the expected dollar rate of return on the euro deposit:

i) Conversion of \$8,000 into euros on January 1, 2018 yields ____________

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