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The interest rate on EUR deposits is 7%.

The interest rate on EUR deposits is 7%. The interest rate on GBP deposits is 5%. The spot rate is EUR/GBP0.8500. What is the one year forward rate predicted to be assuming interest rate parity holds true?

A.

0.8662

B.

0.8341

C.

0.7500

D.

0.9633

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