A particular tennis racquet costs $160 in the United States. The same racquet currently costs ¥17,500 in Japan. In addition, an investor has observed that 3-month interest rates in the United States and Japan are currently 2.00 percent and 0.40 percent, respectively. If purchasing power and interest rate parity both hold, what do these data imply about the 3-month forward rate between yen and U.S. dollars expressed in American terms?

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The Answer of A particular tennis racquet costs $160 in the United States. The same racquet currently costs ¥17,500 in Japan. In addition, an investor has observed that 3-month interest rates in the United States and Japan are currently 2.00 percent and 0.40 percent, respectively. If purchasing power and interest rate parity both hold, what do these data imply about the 3-month forward rate between yen and U.S. dollars expressed in American terms?

A Particular Tennis Racquet Costs $160 in the United States