Suppose That at Some Point the Spot Exchange Rate Is

question 32

Multiple Choice

Suppose that at some point the spot exchange rate is equal to 100 yen per one U.S.dollar,while the interest rate in dollars is 6% and the interest rate in yen is 1%.What is the approximate forward rate that is consistent with this situation?

• A)95.3 yen per dollar
• B)105 yen per dollar
• C)107 yen per dollar
• D)92 yen per dollar

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Definitions:

Establishing Prices

The process of determining the selling price of goods or services, taking into account factors like costs, market demand, competition, and desired profit margins.

Regulating

The process of controlling or governing according to rules or principles, often carried out by a governmental body.

Price Discount

A reduction from the usual cost of an item or service, used as a strategy to increase customer purchases or reduce inventory.

Anticipation Inventory

Stocks held in anticipation of customer demand, allowing companies to meet consumer needs without delay.