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# (1) The current spot price of the euro is currently \$1. The interest-rate on a 1-year U. bond is 5 percent, while the interest-rate on an ECB-backed...

(1) The current spot price of the euro is currently \$1.25. The interest-rate on a 1-year U.S. bond is 5 percent, while the interest-rate on an ECB-backed bond is 2 percent. What must the forward price of the euro for delivery one year from now?

(2)Capitol Carriers just paid a dividend of \$0.66 per share (think yesterday). The dividend is set to grow 7 percent for the next five years and at 3 percent after that (forever). The expected return is 12 percent. What is the share price and dividend in year three (P3, D3)? What is the current share price (P0)?

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