January 1, 1994, the annual inflation rates in the U.S. and Italy were expected to be 4% and 7%, respectively. If the current spot rate on that day was $1 = L2,000, then the expected spot rate for the lira in three years was
A) $.0004591
B) $.0011590
C) $.0009892
D) $.0005471
Correct Answer:
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