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Forward rate premium or discount

Task: Deriving the Forward Rate: Assume that annual interest rates in the U.S. are 4 percent, while interest rates in France are 6

percent.

1) According to IRP, what should the forward rate premium or discount of the euro be?

2) If the euro's spot rate is $1.10, what should the one-year forward rate of the euro be?

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## Q : What would be the current market price of the bond

Given your answer in (a), what would be the current market price of this bond?