Japanese Yen Forward.Use the following spot and forward bid-ask rates for the Japanese yen/U.S. dollar (/$) exchange rate from September 16, 2010, to answer the following questions:

a. What is the mid-rate quote for each maturity?

b. What is the annual forward premium on the yen for all maturities? (Assume that the U.S. dollar is the home currency. Also use the Mid-Rate values computed in part a.)

c. Which maturities have the smallest and largest forward premiums?

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Period	/$ Bid Rate	/$ Ask Rate
spot	80.9780.97	81.0181.01
1 month	80.5680.56	80.5980.59
2 months	80.4180.41	80.4680.46
3 months	79.8979.89	79.9279.92
6 months	78.7278.72	78.7678.76
12 months	78.4478.44	78.4978.49
24 months	77.3377.33	77.3777.37

a. What is the mid-rate quote for each maturity?

Calculate the mid-rate for each maturity below:(Round to three decimal places.)

	Days	Bid Rate	Ask Rate	Mid-rate
Period	Forward	/$	/$	/$
Spot	0	80.97	81.01	80.990

1 month

30

80.56

80.59

80.575

2 months

60

80.41

80.46

80.435

3 months

90

79.89

79.92

79.905

6 months

180

78.72

78.76

78.740

12 months

360

78.44

78.49

78.465

24 months

720

77.33

77.37

77.350

b. What is the annual forward premium on the yen for all maturities? (Assume that the U.S. dollar is the home currency.)

Calculate the annual forward premium for all maturities below. Use the Mid-Rate values computed in part

a..

(Round to three decimal places.)

	Days	Bid Rate	Ask Rate	Forward
Period	Forward	/$	/$	Premium
Spot	0	80.97	81.01
1 month	30	80.56	80.59	6.180	%

2 months

60

80.41

80.46

4.140

%

3 months

90

79.89

79.92

5.431

%

6 months

180

78.72

78.76

%