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5 . The 1 - year interest rate in the U . S . is 1 . 0 5 % . The spot exchange rate

5. The 1-year interest rate in the U.S. is 1.05%. The spot exchange rate for yen is 130 to the dollar. The 6-month forward rate is 128 to the dollar. Suppose that the interest parity holds, use this information to calculate the 1-year risk-free rate in Japan.

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