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The Current U

question 5

Multiple Choice

The current U.S. dollar-yen spot rate is ¥125/$. If the 90-day forward exchange rate is ¥127/$ then the yen is selling at a per annum ________ of ________.


Definitions:

Principal

The original sum of money borrowed in a loan, or the initial amount of investment, excluding any interest or dividends.

Maturity Value

The amount that will be received at the maturity date of an investment, including the principal and any accrued interest.

Future Value

The value of an asset or cash at a specified date in the future calculated based on assumed rate of growth or interest.

Compound Interest

Interest calculated on the initial principal and also on the accumulated interest of previous periods.

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