1.You want to buy raw materials for your firm and have found a place to but it but they require payment in Yens.

a. What is the current exchange rate for Japanese Yens expressed in yens per dollar?

b. What is the current exchange rate for Japanese Yens expressed in dollars per yen?

c. They want to charge you 10,000,000 Yen. If you can buy the same quantity of materials elsewhere for $100,000 US dollars should you buy it here in US dollars or go buy it from the source where you need to pay in Yen? (assume exchange rates stay pretty stable)

2. Explain what spot rates are?

3. Explain what forward rates are?

4. Explain what a real exchange rate is and how to calculate it.