From Question 3 to 7 Suppose the current exchange rate between US and Japan is 0.009 ($ per yen). The dollar- denominated annual continuously compounded risk-free rate is 3% and the yen-denominated annual continuously compounded risk-free rate is 1%. Question 3 What is the 9-month prepaid forward price ($ per yen)? *leave your answer in 3 sig. fig Answer: What is the 9-month forward price ($ per yen)? *Leave your answer in 3 sig. fig Answer: Suppose you observed a 9-month forward price of $0.01 per yen. What would you do to capture the arbitrage profit? Select one: O a. Long forward, borrow dollar and lend yen. O b. Long forward, lend dollar and borrow yen. O c. Short forward, borrow dollar and lend yen. O d. Short forward, lend dollar and borrow yen. Is the following statement true or false? The forward curve ($ per yen) is upward sloping. Note: Forward curve describe the relationship between the price of a forward contract and the maturity of the forward contract. i.e. if the forward price is higher when the maturity of the forward contract is longer, then forward curve is upward sloping. Select one: True O False How much arbitrage profit in dollar do you make per yen at t=9 months? *Leave your answer in 3 sig. fig