The correct answer is D, which represents the 2-year forward USD per EUR 1 exchange rate calculated using the interest rate parity equation. The formula for the forward rate, $F_t$, is given by:

$F = \frac{(1 + R_{USD})^T \times S}{(1 + R_{EUR})^T}$

Where:

• $S$ is the spot exchange rate (1.13 USD per EUR in this case).
• $R_{USD}$ is the USD risk-free rate (2.7% per year).
• $R_{EUR}$ is the EUR risk-free rate (1.7% per year).
• $T$ is the time to delivery, which is 2 years for this question.

Substituting the given values into the formula:

$F = \frac{(1 + 0.027)^2 \times 1.13}{(1 + 0.017)^2}$

$F = \frac{(1.027)^2 \times 1.13}{(1.017)^2}$

$F = \frac{1.054729 \times 1.13}{1.034246}$

$F = \frac{1.19554497}{1.034246}$

$F \approx 1.1523$

This calculation shows that the 2-year forward exchange rate is approximately 1.1523, which confirms that option D is the correct answer. The other options (A, B, and C) represent different scenarios or incorrect calculations of the forward rate, such as using switched rates or incorrect time periods.