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1. Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.015, while in the 180-day forward market 1 Japanese yen = $0.0156. 180-day risk-free securities yield 1.2% in Japan. What is the yield on 180-day risk-free securities in the United States? Round your answer to 2 decimal places. Do not round intermediate calculations.

2. In the spot market, 1.80 Brazilian real can be exchanged for 1 U.S. dollar. An Apple iPad Air costs $630 in the United States. If purchasing power parity (PPP) holds, what should be the price of the same iPad Air in Brazil? Round your answer to the nearest whole number. Do not round intermediate calculations.

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Financial Management, Finance

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