We know that the yen and the swiss franc have a 100yen sf 1, Ask an Expert

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We know that the yen and the swiss franc have a 100yen/ sf 1 exchange rate, meaning one swiss franc buys 100 yen in the spot ER market. The 1 year forward rate is 108 yen /swiss franc , or 1 franc buys 108 yen in the forward market. If the swiss franc has an interest rate of .11, what should the yen rate be for IPT (interest parity theory) to be attained? If the yen rate were 16%, would there be equilibrium? If so, what would transpire? Show both amounts and differentials. Also, show everything in both yen and franc terms.

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Financial Management, Finance

Category:- Financial Management
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