If the spot rate for Jupiter Ringlets (JPR)is 3 USD per Ringlet and the risk-free rates of return are 1% and 2%,respectively for the Jupiter and U.S.economy,then what should the 1-year forward rate be for JPR/USD? Round to the nearest 4th decimal place.

Question

Quizplus · Accepted Answer

USD/JPR spot = 3 ===> JPR/USD spot = .33333333
Forward Rate = Spot Rate ´ ({1+ Foreign risk-free}/{1+ Domestic risk-free})
= 33333 ´ (1.01/1.02)= .3300654

If the Spot Rate for Jupiter Ringlets (JPR)is 3 USD