The spot rate for the Japanese yen currently is *117 per $1. The one-year forward rate is *116 per $1. A risk-free asset in Japan is currently earning 4 %. If interest rate parity holds, what rate can you earn on a one-year risk-free Canadian security?
A) 3.14 %
B) 3.62 %
C) 4.14 %
D) 4.90 %
E) 5.03 %
Correct Answer:
Verified
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