The following information was availablespot rate for, Ask an Expert

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The following information was available

Spot rate for Japanese yen: 0.009854 $/yen

680 day forward rate for Japanese yen: 0.010927 $/yen

(assume a 365 day year)

The US risk free rate 6.50%

The Japanese risk free rate 1.20%

a) assuming annual compounding, what is the expected 680 day forward rate.

b) Based on the value determined in part a is there an arbitrage opportunity?

c) if the answer in part b was yes, describe the arbitrage strategy. Assume you have the ability to borrow either 100

d) Total profit, including the currency of the profit

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92809584

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