Assume the Spot Rate for the Japanese Yen Currently Is

question 14

Multiple Choice

Assume the spot rate for the Japanese yen currently is ¥102.32 per $1 and the one-year forward rate is ¥102.69 per $1. A risk-free asset in Japan is currently earning 2.5 percent. If interest rate parity holds, approximately what rate can you earn on a one-year risk-free U.S. security?

• A) 1.63 percent
• B) 2.01 percent
• C) 2.14 percent
• D) 2.96 percent
• E) 1.01 percent

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Definitions:

Partnership Dissolves

The process by which the association between individuals or entities conducting a business jointly is formally ended.

Limited Liability Partnership

A partnership in which some or all partners have limited liabilities, protecting them from certain legal actions and financial responsibilities.

Personal Liability

The responsibility of an individual to settle debts or legal obligations from their own assets, rather than the protection offered by operating within a corporation or limited liability entity.

Malpractice

Professional misconduct or the failure to exercise the requisite degree of skill as a professional. Negligence—the failure to exercise due care—on the part of a professional, such as a physician or an attorney, is commonly referred to as malpractice.