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A Japanese investor can earn a 3.25% interest rate in Japan or 2.75% in the U.S. The spot exchange rate is 105 yen to the
A Japanese investor can earn a 3.25% interest rate in Japan or 2.75% in the U.S. The spot exchange rate is 105 yen to the dollar. At what forward rate would an investor be indifferent between the U.S. and Japanese investments? Referring to the above question, what would you do if the forward rate was for fewer yen per dollar than the indifference rate. Please address part two of the
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