Assume the spot rate for the Japanese yen currently is ¥99.31 per $1 and the one-year forward rate is ¥97.62 per $1.A risk-free asset in Japan is currently earning 2.5 percent.If interest rate parity holds,approximately what rate can you earn on a one-year risk-free U.S.security?
A) 1.63 percent
B) 2.11 percent
C) 4.20 percent
D) 4.96 percent
E) 5.01 percent
Correct Answer:
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