On December 3,2001,spot Japanese yen were sold at $0.008058.Suppose the 180-day forward Japanese yen was selling at a 1.91% annualized premium,what is the 180-day forward rate of the yen?

Question

Quizplus · Accepted Answer

To calculate the 180-day forward rate, we first need to calculate the premium using the formula:
Premium = (1 + annualized premium rate)^(days/360) - 1
Here, days = 180 and annualized premium rate = 1.91%
Premium = (1 + 0.0191)^(180/360) - 1
Premium = 0.009556
Next, we can calculate the forward rate using the formula:
Forward rate = Spot rate x (1 + premium)
Forward rate = 0.008058 x (1 + 0.009556)
Forward rate = 0.008135
Therefore, the 180-day forward rate of the yen is 0.008135, which is option B.

On December 3,2001,spot Japanese Yen Were Sold at $0