If the Japanese Yen Is Expected to Appreciate Against the U.S

question 66

Multiple Choice

If the Japanese yen is expected to appreciate against the U.S. dollar and interest rates in the United States and Japan are similar, banks may try speculating on this anticipated exchange rate movement by borrowing ____ and investing in ____.​

• A) ​yen; dollars
• B) ​yen; yen
• C) ​dollars; yen
• D) ​dollars; dollars

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Definitions:

Management Fees

These are fees paid to managers for their role in operating an investment fund, usually expressed as a percentage of assets under management.

Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.

Unbiased Forward Rate

An estimate of future spot interest rates implied by current interest rates, under the assumption that the forward rates are an unbiased predictor of future spot rates.

Future Spot Rate

The anticipated price of an asset at a future date in a spot transaction, which involves the immediate settlement of the transaction.