The interest rate on euros is 8%. The interest rate in the UK is 5%. The euro's forward rate should exhibit a premium of about 3%.

Name: The interest rate on euros is 8%. The interest rate in the UK is 5%. The euro's forward rate should exhibit a premium of about 3%.
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The euro's forward rate should exhibit a discount of about 3% because the interest rate on euros is higher than in the UK, leading to a forward rate adjustment in favor of the currency with the lower interest rate.

The Interest Rate on Euros Is 8