If the Forward Exchange Rate of the Yen in Terms

question 20

Multiple Choice

If the forward exchange rate of the yen in terms of dollars is greater than the spot exchange rate,

• A)Japanese interest rates must be higher than U.S. interest rates.
• B)U.S. interest rates must be higher than Japanese interest rates.
• C)market participants must be expecting the dollar to appreciate against the yen.
• D)market participants must be expecting the dollar to depreciate against the yen.

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