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A U.S. investor makes a deposit of JPY 100,000,000 at a London bank. This transaction is referred to as a/an: Euroeuro deposit Poundyen deposit Eurodollar

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A U.S. investor makes a deposit of JPY 100,000,000 at a London bank. This transaction is referred to as a/an: Euroeuro deposit Poundyen deposit Eurodollar deposit Europound deposit Euroyen deposit The current export price of a Lexus SUV from Japan is JPY 4,800,000 and the exchange rate is JPY120/USD. The forecasted rate of inflation over the next 12 months is 4% for the U.S. and 1% for Japan. If the exchange rate pass-through is 40%, what is the expected price of the SUV in the U.S. in a year ? [Hint: Use the following relative formula where S1 is the expected spot rate and so is the current spot rate.] (1 + JPY S Sox (1 + 74 USD) USD 40,000 USD 40,475 USD 40,713 USD 40,356 USD 40,901

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