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  3. assume the spot rate for eur/usd is 1.05 (i.e. 1 e

Assume the spot rate for EUR/USD is 1.05 (i.e. 1 Euro buys 1.05 dollars). A...

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Finance

Assume the spot rate for EUR/USD is 1.05 (i.e. 1 Euro buys 1.05 dollars). A U.S. bank pays 5.0% compounded annually for a one year for a dollar deposit and a German bank pays 2.5 % compounded annually for a one year Euro deposit. What is the forward exchange rate for EUR/USD one year from now?

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