[1.]

At today's spot exchange rates 1 U.S. dollar can be exchanged for 9 Mexican pesos or for 110.37 Japanese yen. You have pesos that you would like to exchange for yen. What is the cross rate between the yen and the peso; that is, how many yen would you receive for every peso exchanged? Do not round intermediate calculations. Round your answer to two decimal places.

____________ yen per peso

[2.]

The nominal yield on 6-month T-bills is 4%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 3.5%. In the spot exchange market, 1 yen equals $0.012. If interest rate parity holds, what is the 6-month forward exchange rate? Do not round intermediate calculations. Round your answer to five decimal places.

$____________

[3.]

If euros sell for $1.71 (U.S.) per euro, what should dollars sell for in euros per dollar? Round your answer to four decimal places.

___________ euros per dollar

[4.]

Assume that interest rate parity holds. In both the spot market and the 90-day forward market, 1 Japanese yen equals 0.0092 dollar. In Japan, 90-day risk-free securities yield 4.8%. What is the yield on 90-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.

___________%

[5.]

In the spot market, 8.3 pesos can be exchanged for 1 U.S. dollar. A pair of headphones costs $9 in the United States. If purchasing power parity holds, what should be the price of the same headphones in Mexico? Do not round intermediate calculations. Round your answer to two decimal places.

____________ pesos

[6.]

Assume that interest rate parity holds and that 90-day risk-free securities yield 3% in the United States and 3.4% in Germany. In the spot market, 1 euro equals $1.41.

What is the 90-day forward rate? Do not round intermediate calculations. Round your answer to four decimal places.

$______________

Is the 90-day forward rate trading at a premium or discount relative to the spot rate?

The 90-day forward rate is trading at a[premium or discount] relative to the spot rate.