The current U.S. dollar-yen spot rate is 85¥/$. If the 90-day forward exchange rate is 88 ¥/$ then the yen is selling at a per annum ________ of ________.

Question

Quizplus · Accepted Answer

The yen is selling at a discount because the forward rate (88 ¥/$) is higher than the spot rate (85 ¥/$). The annualized discount rate is calculated as [(Forward Rate - Spot Rate) / Spot Rate] * (360/90) * 100%, which equals 13.64%.

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