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An American investor is considering investing $1,000 in default-free 90-day Japanese bonds that promise a 4% annual nominal return. The spot exchange rate is X104.79
An American investor is considering investing $1,000 in default-free 90-day Japanese bonds that promise a 4% annual nominal return. The spot exchange rate is X104.79 per dollar. The 90-day forward exchange rate is 103.55 per dollar. The investor's annualized return on these bonds if he or she can lock in the dollar return by selling the foreign currency in the forward market-will be 8.836% 8.836% 10.161% 7.069% Which of the following statements is im 9.720% st rate parity theory? A product bought in one country should have the same price in other countries, adjusted for exchange rate. Interest rates in all countries with the same political risk should be the same. If two countries have the same inflation rate, they should have the same interest rate, too. An investment in one's home country should have the same return as a similar investment in a foreign country
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