The 1 year interest rate in the U.S. is 2%. The spot exchange rate for yen is 113.25 to the dollar. The 6 months forward rate is 112.96 to the dollar. These prices indicate that the 6 month risk-free rate in Japan is
A) 1.74%.
B) 2.26%.
C) 4.31%.
D) 1.99%.
Correct Answer:
Verified
Q57: Spot transactions are made immediately in the
Q58: Foreign exchange transactions carried out in the
Q59: The bid rate (also called the offer
Q60: A narrow spread indicates efficiency in the
Q61: Forward contracts benefit only the customer due
Q63: What is the difference between forward rates
Q64: A theory that relates the ratios of
Q65: What is the role of arbitrage in
Q66: Which of the following statements is true?
A)
Q67: According to the domestic Fisher effect, if
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents