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 $408.03 1.42% part B3.07%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
part a.
The spot rate between the Japanese yen and the U.S. dollar is ¥106.70/$, 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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