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part a.    The spot rate between the Japanese yen and the U.S. dollar is ¥106.70/$, while the one-year forward rate is ¥105.83/$. The one-year risk-free rate in the U.S. is 2.43 percent. If interest rate parity exists, what is the one-year risk-free rate in Japan?   Multiple Choice 3.27% 1.59% 2.86%   The spot rate between the U.K. and the U.S. is £.7634/$, while the one-year forward rate is £.7544/$. The risk-free rate in the U.K. is 4.67 percent and in the United States is 2.78 percent. How much in profit can you earn on $13,000 utilizing covered interest arbitrage?   Multiple Choice $95.94 $85.28 $326.43 $357.03 $408.03 1.42%   part B3.07%

part a.    The spot rate between the Japanese yen and the U.S. dollar is ¥106.70/$, while the one-year forward rate is ¥105.83/$. The one-year risk-free rate in the U.S. is 2.43 percent. If interest rate parity exists, what is the one-year risk-free rate in Japan?   Multiple Choice 3.27% 1.59% 2.86%   The spot rate between the U.K. and the U.S. is £.7634/$, while the one-year forward rate is £.7544/$. The risk-free rate in the U.K. is 4.67 percent and in the United States is 2.78 percent. How much in profit can you earn on $13,000 utilizing covered interest arbitrage?   Multiple Choice $95.94 $85.28 $326.43 $357.03 $408.03 1.42%   part B3.07%

International Financial Management
International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter7: International Arbitrage And Interest Rate Parity
Section: Chapter Questions
Problem 11QA
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part a. 

 

The spot rate between the Japanese yen and the U.S. dollar is ¥106.70/$, while the one-year forward rate is ¥105.83/$. The one-year risk-free rate in the U.S. is 2.43 percent. If interest rate parity exists, what is the one-year risk-free rate in Japan?

 

Multiple Choice

  • 3.27%

  • 1.59%

  • 2.86%

  •  

    The spot rate between the U.K. and the U.S. is £.7634/$, while the one-year forward rate is £.7544/$. The risk-free rate in the U.K. is 4.67 percent and in the United States is 2.78 percent. How much in profit can you earn on $13,000 utilizing covered interest arbitrage?

     

    Multiple Choice

    • $95.94

    • $85.28

    • $326.43

    • $357.03

    • $408.03

      1.42%

       

      part B3.07%

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