1.

a) Find the effective rate of interest on $3,000,000 of federal funds sold overnight at a state rate of 1.45%.

b) A U.S. investor buys Japanese yen for $0.12033 and invests in a one-year Japanese security with a yield of 2.8%. After one year, the investor converts the proceeds from the investment back to dollars at the spot rate of $0.11966 per yen. What is the effective yield earned by the investor?