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:

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