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Suppose 120-day investments in Japan have a 7% annualized return. In the U.S.,120-day investments of similar risk have a 3% annualized return. In the 120-day forward market, 1 Japanese yen equals $0.0091. If interest rate parity holds, what is the spot exchange rate?

1) 0.0077

2) 0.0159

3) 0.0111

4) 0.0133

5) 0.0092

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92354069

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