A Fund Has Assets Denominated in Euros and Liabilities in Yen

question 52

Multiple Choice

A fund has assets denominated in euros and liabilities in yen due in six months.The six month forward rate for euro is $1.36 per euro and the six month forward rate for the yen is 121 yen per dollar.The six month forward rate for the euro versus the yen should be ________ per euro.

• A) ¥88.97
• B) ¥145.34
• C) ¥154.67
• D) ¥164.56

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Definitions:

Lewis Definition

A theory of acids and bases where acids accept a pair of electrons during a reaction, while bases donate a pair of electrons.

Acids

Substances that donate protons (hydrogen ions) in aqueous solutions and can react with bases to form salts, often characterized by a sour taste.

Electrophile

A reactive species that seeks out electrons, often forming a bond by accepting an electron pair from a nucleophile.

Nucleophile

A chemical species that donates an electron pair to an electrophile to form a chemical bond.