Q 1 to Q 7 combined: You have just started working as a trader for Credit Suisse in New York. The following are quotes for Japanese (JPY) against the dollar (USD) for spot, 1 month forward, 3 months forward, 6 months forward and one year forward. All the rates are quoted as the number of JPY per USD.

Spot exchange rate: the Bid rate is 128.02 JPY per USD the Ask Rate is 128.06 JPY per USD

Forward points: 1 month forward 12 - 09 3 months forward 46 - 41 6 months forward 102 - 92 1 year forward 204 - 184

Q 7: Based on the information in this question, do you think (pick the most appropriate choice):

A./ Japanese interest rates are higher than US interest rates. B./ Japanese interest rates are lower than US interest rates. C./ Japanese interest rates and US interest rates are the same. D./ I don't know the answer. Oliver the Finance Pug knows the answer but he is fast asleep after a long lunch and I do not want to wake him. E./ Oliver the Finance Pug has never been to Japan so even he does not know the answer.