Problem 4. The current Japanese yen/US dollar spot rate is ¥80 per dollar (that is, E¥/S= 80), and the current 3-month forward rate is ¥75 per dollar (that is, F¥/S= 75). Again, starting from your initial fund of $100, what will be your rate of return on your risk- taking transactions if the spot rate in 3 months turn out to be ¥82 per dollar rather than your forecast of ¥72?
Problem 4. The current Japanese yen/US dollar spot rate is ¥80 per dollar (that is, E¥/S= 80), and the current 3-month forward rate is ¥75 per dollar (that is, F¥/S= 75). Again, starting from your initial fund of $100, what will be your rate of return on your risk- taking transactions if the spot rate in 3 months turn out to be ¥82 per dollar rather than your forecast of ¥72?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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