Question
Hello, This is a question for my International Economics homework. An answer with explanation will be greatly appreciated, Thank you! You have access to the
Hello, This is a question for my International Economics homework. An answer with explanation will be greatly appreciated, Thank you!
You have access to the following rates:
Current spot exchange rate: $0.0100/yen
Current 180-day forward exhange rate: $0.0105/yen
180-day U.S. Interest rate (on dollar-denominated assets): 6.05%
180-day Japanese Interest rate (on yen-denominated assets): 1.00%
- The Interest rates are true 180-day rates (not annualized). You can borrow or invest at these rates. Calculate the actual amounts involved for the two ways around the lake to get between each of the following:
a. Start with $1 now and end with dollars in 180 days.
b. Start with $1 now and end with yen in 180 days.
c. Start with 100 yen now and end with yen in 180 days.
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