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Economics

Q. Assume the 12 month forward price of the dollar in terms of the yen is 144 yen per dollar. Assume which the spot price of the dollar in terms of yen is 160. Next assume which the present yearly interest rate on yen deposits is 3%, while the interest rate a comparable dollar deposit is 12%. There are no transaction costs. Is there an arbitrage prospect here? If so, explain exactly how you would take advantage of this situation to create a riskless profit.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9219645

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