Suppose that you know the following (i) New Zealand 3 month Treasury bills yield 10% per annum (ii) Japanese 3 month Treasury bills yield 8% per annum (iii) the spot exchange rate is ¥80 = $1 (iv) the 3 month forward exchange rate is ¥77.5 = $1 The return to investing NZ$1 in New Zealand for 3 months is NZ$_____ (use 3 d.p. and include the original $1 invested in the value of the return) The return to investing NZ$1 in Japan for 3 months is NZ$_____ (use 3 d.p. and include the original $1 invested in the value of the return) The result of this is that we would expect the spot value of the $NZ to (Select: rise, fall, remain unchanged) and the forward value of the $NZ to (Select: rise, fall, remain unchanged).
Suppose that you know the following
(i) New Zealand 3 month Treasury bills yield 10% per annum
(ii) Japanese 3 month Treasury bills yield 8% per annum
(iii) the spot exchange rate is ¥80 = $1
(iv) the 3 month forward exchange rate is ¥77.5 = $1
The
The return to investing NZ$1 in Japan for 3 months is NZ$_____ (use 3 d.p. and include the original $1 invested in the value of the return)
The result of this is that we would expect the spot value of the $NZ to (Select: rise, fall, remain unchanged) and the forward value of the $NZ to (Select: rise, fall, remain unchanged).
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