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eBook Problem 17-02 Interest Rate Parity The nominal yield on 6-month T-bills is 7%, while default-free Japanese bonds that mature in 6 months have a

eBook Problem 17-02

Interest Rate Parity

The nominal yield on 6-month T-bills is 7%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 5.5%. In the spot exchange market, 1 yen equals $0.008. If interest rate parity holds, what is the 6-month forward exchange rate? Round the answer to five decimal places.

Do not round intermediate calculations.

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