Assignment 2: IFE Theory Jack is considering an investment that involves buying Euros today and then converting them back to dollars one year from today. He is going to base

Assignment 2: IFE Theory Jack is considering an investment that involves buying Euros today and then converting them back to dollars one year from today. He is going to base his investment on the international Fisher effect and has asked for your in evaluating the opportunity. Currently, the one year interest rate is 6% in Europe. Interest rates in the U.S. for one year securities are at 4% and the current spot rate for Euros is €1.15. Jack’s strategy is to convert $110,000 USD into Euros today and one year from now convert them back to dollars. Will Jack’s strategy work?

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