Suppose That the Risk-Free Rates in the United States and in Japan

question 11

Multiple Choice

Suppose that the risk-free rates in the United States and in Japan are 5.25% and 4.5%, respectively. The spot exchange rate between the dollar and the yen is $0.008828/yen. What should the futures price of the yen for a one-year contract be to prevent arbitrage opportunities, ignoring transactions costs?

• A) $0.009999/yen
• B) $0.009981/yen
• C) $0.008981/yen
• D) $0.008891/yen

---

Definitions:

Entrepreneurial Personality

A set of personality traits or characteristics that are commonly found in successful entrepreneurs, such as risk-taking, creativity, and resilience.

Need To Achieve

The personal quality, linked to entrepreneurship, of being motivated to excel and choose situations in which success is likely.

Entrepreneurship

The act of creating, managing, and building a business venture to make a profit while taking on financial risks.

Success

The achievement of set goals, targets or intended outcomes, often marked by performance or attainment in personal or business endeavors.