A Japanese investor can earn a 1 percent annual interest rate in Japan or about 3.5 percent per year in the United States. If the spot exchange rate is 101 yen to the dollar,at what one-year forward rate would an investor be indifferent between the U.S. and Japanese investments?
A) ¥100.58
B) ¥98.56
C) ¥101.68
D) ¥97.42
E) ¥103.50
Correct Answer:
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