QUESTION 2 The annual interest rate for bank deposits in Euros is 0.025 while that on US dollar deposits is 0.035. A Euro costs 1.20 dollars. The forward exchange rate for next year is 1.20 dollars...

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Extracted text: QUESTION 2 The annual interest rate for bank deposits in Euros is 0.025 while that on US dollar deposits is 0.035. A Euro costs 1.20 dollars. The forward exchange rate for next year is 1.20 dollars per Euro. What is the expected return on investing in Europe. 0.025 0.05 0.01 -0.02 QUESTION 3 The US interest rate is 0.05 while the interest rate in Australia is 0.10. What is the expected return on investing in Australia. O 0.05 O 0.10 O 0.12 O 0.02