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5. Given the following information and international parity conditions, estimate the investment return and future exchange rate movement Currency 1-Yr LIBOR Currency Pair Spot JPY

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5. Given the following information and international parity conditions, estimate the investment return and future exchange rate movement Currency 1-Yr LIBOR Currency Pair Spot JPY 0.10% JPY/CAD 96.3719 CAD 1.00% CAD/GBP 1.588 0.65% JPY/GBP 153.0408 GBP 1) Calculate the one year investment return to a Canadian investor whose cur- rency exposure to GBP is fully hedged if covered interest parity holds. 2) Forecast JPY/GBP exchange rate one year from now if uncovered interest parity holds. 3) What is the expected movement of JPY/CAD one year from now if uncovered interest rate parity holds

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