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Please answer this question and show the steps and how u solved it You observe the following current rates: Spot exchange rate: $0.01r'yen. Annual interest
Please answer this question and show the steps and how u solved it
You observe the following current rates: Spot exchange rate: $0.01r'yen. Annual interest rate on 90day U.S. dollaridenominated bonds: 4%. Annual interest rate on 90day yendenominated bonds: 4%. 1- If uncovered interest parity holds, what spot exchange rate do investors expect to exist in 90 days? 2- A close US. presidential election has just been decided. The candidate whom international investors view as the stronger and more pro-business person won. Because of this, investors expect the exchange rate to be $0.0095fyen in 90 days. What will happen in the foreign exchange market for yen (draw the demand/supply diagram)Step by Step Solution
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