The 1-Year Forward Rate Between the U

question 61

Multiple Choice

The 1-year forward rate between the U.S. and Japan is ¥122.47 = $1. A 1-year risk-free security in Japan is yielding 5.3 percent while it is 4.6 percent in the U.S. Assume interest rate parity exists. What is the spot rate between the U.S. and Japan?

• A) ¥120.41
• B) ¥121.08
• C) ¥121.66
• D) ¥121.94
• E) ¥122.03

---

Definitions:

Rationalism

A philosophical belief that reason is the chief source of knowledge, emphasizing logic and factual analysis.

Great Awakening

A series of religious revivals in the British American colonies during the 18th century, which emphasized personal faith, emotional experience, and the need for revival of religious devotion.

New Lights

A term from the First Great Awakening referring to those who experienced a conversion experience and supported new religious practices, distinguishing them from "Old Lights" who were skeptical of the new revivalist methods.

National Unity

The sense of solidarity and cohesion among the citizens of a nation, fostering a sense of shared identity and purpose.