Problemassume the spot rate for the japanese yen currently, Ask an Expert

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Problem:

Assume the spot rate for the Japanese yen currently is ¥99.31 per $1 and the one-year forward rate is ¥97.62 per $1. A risk-free asset in Japan is currently earning 2.5 percent.

Required:

If interest rate parity holds, approximately what rate can you earn on a one-year risk-free U.S. security?

Required:

1.63 percent
4.20 percent
5.01 percent
4.96 percent
2.11 percent

Note: Be sure to show how you arrived at your answer.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162604

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