Suppose that the U.S. firm Halliburton buys construction equipment from the Japanese firm Komatsu at a price of ¥250 million The equipment is to be delivered to the United States and paid for in one year. The current exchange rate is ¥96 = $1. The current interest rate on one-year U.S. Treasury bills is 6%, and on one-year Japanese government bonds the interest rate is 4%. a. If Halliburton exchanges dollars for yen today and invests the yen in Japan for one year, it will need $ to exchange today in order to have ¥250 million in one year. (Round your response to the nearest dollar)
Suppose that the U.S. firm Halliburton buys construction equipment from the Japanese firm Komatsu at a price of ¥250 million The equipment is to be delivered to the United States and paid for in one year. The current exchange rate is ¥96 = $1. The current interest rate on one-year U.S. Treasury bills is 6%, and on one-year Japanese government bonds the interest rate is 4%. a. If Halliburton exchanges dollars for yen today and invests the yen in Japan for one year, it will need $ to exchange today in order to have ¥250 million in one year. (Round your response to the nearest dollar)
ChapterP2: Part 2: Exchange Rate Behavior
Section: Chapter Questions
Problem 1Q
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![Suppose that the U.S. firm Halliburton buys construction equipment from the Japanese firm Komatsu at a price of ¥250 million
The equipment is to be delivered to the United States and paid for in one year. The current exchange rate is ¥96 = $1. The
current interest rate on one-year U.S. Treasury bills is 6%, and on one-year Japanese government bonds the interest rate is
4%.
a. If Halliburton exchanges dollars for yen today and invests the yen in Japan for one year, it will need to exchange today
in order to have ¥250 million in one year. (Round your response to the nearest dollar)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F71e73376-288f-44a2-851a-a51375f80b6c%2Fd8e56897-17ad-4df8-9260-1fcef8db70af%2Fdx9uvf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose that the U.S. firm Halliburton buys construction equipment from the Japanese firm Komatsu at a price of ¥250 million
The equipment is to be delivered to the United States and paid for in one year. The current exchange rate is ¥96 = $1. The
current interest rate on one-year U.S. Treasury bills is 6%, and on one-year Japanese government bonds the interest rate is
4%.
a. If Halliburton exchanges dollars for yen today and invests the yen in Japan for one year, it will need to exchange today
in order to have ¥250 million in one year. (Round your response to the nearest dollar)
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