Japanese/Australia Parity Conditions William Leon is attempting to determine whether Japanese and Australian financial conditions are at parity. The current spot rate is a flat 108.44/A$, while the one-year forward rate is 106.55/A$. Forecast inflation is 5.01% for Japan and 6.93% for the Australia. The one-year Japanese yen deposit rate is 8.01%, and the one-year Australian dollar deposit rate is 9.93% a. Find the forecasted change in the Japanese yen/Australian dollar (/A$) exchange rate one year from now. b. Diagram and calculate whether international parity conditions hold between Japan and Australia. .. a. Find the forecasted change in the Japanese yen/Australian dollar ( / A$) exchange rate one year from now. The forecast change in spot exchange rate is % (Round to two decimal places.) Derek Tosh and Yen-Dollar Parity. Derek Tosh is attempting to determine whether US/Japanese financial conditions are at parity. The current spot rate is a flat 89.00/$, while the 360-day forward rate is 84.90/$. Forecast inflation is 1.100% for Japan, and 5.900% for the US. The 360-day euro-yen deposit rate is 4.700%, and the 360-day euro-dollar deposit rate is 9.500%. a. Calculate whether international parity conditions hold between Japan and the United States. b. Find the forecasted change in the Japanese yen/U.S. dollar (\/$) exchange rate one year from now. a. Calculate whether international parity conditions hold between Japan and the United States. The forecast difference in rates of inflation is % (US higher than Japan). (Round to one decimal place.) Corolla Exports and Pass-Through. Assume that the export price of a Toyota Corolla from Osaka, Japan is 2,150,000 The exchange rate is $87.60/$. The forecast rate of inflation in the United States is 2.2% per year and is 0.0% per year in Japan Use this data to answer the following questions on exchange rate pass-through a. What was the export price for the Corolla at the beginning of the year expressed in US dollars? b. Assuming purchasing power parity holds, what should the exchange rate be at the end of the year? c. Assuming 100% pass-through of exchange rate, what will be the dollar price of a Corolla at the end of the year? d. Assuming 75% pass-through, what will be the dollar price of a Corolla at the end of the year? IEEE a. What was the export price for the Corolla at the beginning of the year expressed in U.S. dollars? (Round to the nearest cent.) The export price for the Corolla at the beginning of the year expressed in U.S. dollars is $ Takeshi Kamada-CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,100,000 or its yen equivalent, in a covered interest arbitrage between U.S. dollars and Japanese yen. He faced the following exchange rate and interest rate quotes. Is CIA profit possible? If so, how? $ 5,100,000 Arbitrage funds available Spot rate (/$) 118.46 180-day forward rate (1$) 117 87 U.S. dollar annual interest rate 4.801 % Japanese yen annual interest rate 3.396 % The CIA profit potential is -0.404 %, which tells Takeshi Kamada that he should borrow the Japanese yen and invest in the higher yielding currency, the US dollar to lock in a covered interest arbitrage (CIA) profit. (Round to three decimal places and select from the drop-down menus.) Takeshi Kamada generates a CIA profit of by investing in the interest rate currency, the and simultaneously selling the proceeds forward into at a forward premium which does not completely negate the interest differential. (Round to two decimal places and select from the drop-down menus.) Takeshi Kamada-CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,000,000 or its yen equivalent, in a covered interest arbitrage between U.S. dollars and Japanese yen. He faced the following exchange rate and interest rate quotes. Is CIA profit possible? If so, how? $ 5,000,000 118.60 Arbitrage funds available Spot rate (\/$) 180-day forward rate (\/$) 117.80 U.S. dollar annual interest rate 4.800 % 3.400 % Japanese yen annual interest rate The CIA profit potential is %, which tells Takeshi Kamada that he should borrow and invest in the higher yielding currency, to lock in a covered interest arbitrage (CIA) profit. (Round to three decimal places and select from the drop-down menus.) Japanese/Australia Parity Conditions William Leon is attempting to determine whether Japanese and Australian financial conditions are at parity. The current spot rate is a flat 108.44/A$, while the one-year forward rate is 106.55/A$. Forecast inflation is 5.01% for Japan and 6.93% for the Australia. The one-year Japanese yen deposit rate is 8.01%, and the one-year Australian dollar deposit rate is 9.93% a. Find the forecasted change in the Japanese yen/Australian dollar (/A$) exchange rate one year from now. b. Diagram and calculate whether international parity conditions hold between Japan and Australia. .. a. Find the forecasted change in the Japanese yen/Australian dollar ( / A$) exchange rate one year from now. The forecast change in spot exchange rate is % (Round to two decimal places.) Derek Tosh and Yen-Dollar Parity. Derek Tosh is attempting to determine whether US/Japanese financial conditions are at parity. The current spot rate is a flat 89.00/$, while the 360-day forward rate is 84.90/$. Forecast inflation is 1.100% for Japan, and 5.900% for the US. The 360-day euro-yen deposit rate is 4.700%, and the 360-day euro-dollar deposit rate is 9.500%. a. Calculate whether international parity conditions hold between Japan and the United States. b. Find the forecasted change in the Japanese yen/U.S. dollar (\/$) exchange rate one year from now. a. Calculate whether international parity conditions hold between Japan and the United States. The forecast difference in rates of inflation is % (US higher than Japan). (Round to one decimal place.) Corolla Exports and Pass-Through. Assume that the export price of a Toyota Corolla from Osaka, Japan is 2,150,000 The exchange rate is $87.60/$. The forecast rate of inflation in the United States is 2.2% per year and is 0.0% per year in Japan Use this data to answer the following questions on exchange rate pass-through a. What was the export price for the Corolla at the beginning of the year expressed in US dollars? b. Assuming purchasing power parity holds, what should the exchange rate be at the end of the year? c. Assuming 100% pass-through of exchange rate, what will be the dollar price of a Corolla at the end of the year? d. Assuming 75% pass-through, what will be the dollar price of a Corolla at the end of the year? IEEE a. What was the export price for the Corolla at the beginning of the year expressed in U.S. dollars? (Round to the nearest cent.) The export price for the Corolla at the beginning of the year expressed in U.S. dollars is $ Takeshi Kamada-CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,100,000 or its yen equivalent, in a covered interest arbitrage between U.S. dollars and Japanese yen. He faced the following exchange rate and interest rate quotes. Is CIA profit possible? If so, how? $ 5,100,000 Arbitrage funds available Spot rate (/$) 118.46 180-day forward rate (1$) 117 87 U.S. dollar annual interest rate 4.801 % Japanese yen annual interest rate 3.396 % The CIA profit potential is -0.404 %, which tells Takeshi Kamada that he should borrow the Japanese yen and invest in the higher yielding currency, the US dollar to lock in a covered interest arbitrage (CIA) profit. (Round to three decimal places and select from the drop-down menus.) Takeshi Kamada generates a CIA profit of by investing in the interest rate currency, the and simultaneously selling the proceeds forward into at a forward premium which does not completely negate the interest differential. (Round to two decimal places and select from the drop-down menus.) Takeshi Kamada-CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,000,000 or its yen equivalent, in a covered interest arbitrage between U.S. dollars and Japanese yen. He faced the following exchange rate and interest rate quotes. Is CIA profit possible? If so, how? $ 5,000,000 118.60 Arbitrage funds available Spot rate (\/$) 180-day forward rate (\/$) 117.80 U.S. dollar annual interest rate 4.800 % 3.400 % Japanese yen annual interest rate The CIA profit potential is %, which tells Takeshi Kamada that he should borrow and invest in the higher yielding currency, to lock in a covered interest arbitrage (CIA) profit. (Round to three decimal places and select from the drop-down menus.)