Assume that the euro interest rate is-伊丞小站（YLIMHS.COM）

Assume that the euro interest rate is constant at 5 percent, and that the expected exchange rate is 1.05 dollars per one euro. Find the expected dollar return on euro deposits for the following cases:

Case	Today’s Dollar/Euro Exchange Rate	Interest Rate on Euro Deposits	Expected Dollar Depreciation Rate Against Euro (1.05 – E)/E	Expected Dollar Return on Euro Deposits Re + (1.05 – E)/E
1	1.07
2	1.06
3	1.05

Case	Today’s Dollar/Euro Exchange Rate	Interest Rate on Euro Deposits	Expected Dollar Depreciation Rate Against Euro (1.05 – E)/E	Expected Dollar Return on Euro Deposits Re + (1.05 – E)/E
1	1.07	0.05	-0.0186916	0.031308411
2	1.06	0.05	-0.009434	0.040566038
3	0.05	0.05	0	0.05