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3.Forward Exchange Rates and Interest Rate Parity Condition(Chapter 14)In the example of Radio Shock, an American importer of Japanese radios anxious about the /$exchange rate
3.Forward Exchange Rates and Interest Rate Parity Condition(Chapter 14)In the example of Radio Shock, an American importer of Japanese radios anxious about the /$exchange rate in 3 monthsforYen payment tothe supplier, Radio Shock solved the problem by selling forward for yen enough dollars to cover the cost of radios. Or by a different, more complicated way through $ borrowing.Show that the two strategies yield the same Yen profit when covered interest parity condition holds,where3 months forward rate F/$= 110, spot rate E/$= 110.5, R3.0p.a.
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