Question
Answer this and the next two questions using the following information: Money and foreign exchange markets in Japan and Swiss are quite efficient. You have
Answer this and the next two questions using the following information: Money and foreign exchange markets in Japan and Swiss are quite efficient. You have the following information: Japan Germany __________________________________________________________ Spot exchange rate 100/DM SF0.01/ Expected inflation rate 2% per annum 5% per annum One-Year T-bll rate Unknown 8% per annum What is you estimate of the one-year T-bill rate in Japan?
What is your estimate of the one-year forward exchange rate between Japanese yen and SF?
Select one:
a. 102.94 /SF
b. 108.00 /SF
c. 97.22 /SF
d. 102.00 /SF
e. 102.86 /SF
What is your best estimate of the one-year future spot exchange rate between Japanese yen and SF?
Select one:
a. 97.22 /SF
b. 108.00 /SF
c. 102.86 /SF
d. 102.00 /SF
e. 102.94 /SF
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