Assume the following information:

Spot: USD/JPY 105-106

- U.S. dollar depositing rate: 6%

- U.S. dollar borrowing rate: 6.5%

- Japanese Yen depositing rate: 3%

- Japanese Yen borrowing rate 3.25%

Assume that : 360 days in a year. 1 month has 30 days.

a./ An American exporter will receive JPY-denominated payment in one year. What will be the number of JPY it will have to deliver to bank in exchange for each dollar he/ she will receive?

b./ An American importer will have to make a payment in Japanese Yen in one year. What is the forward price quoted to the importer?

c/. The company -US based conduct - will pay JPY 1M in next 6 months. Caculate the amount of USD that the company will pay in 6 month. Note: The hedging by signing forward contract.

d/ If the the bank take 2% fee from the question C. What is the new forward rate.