Question
Suppose that at some point the spot exchange rate is equal to 100 yen per one U.S. dollar, while the interest rate in dollars is
Suppose that at some point the spot exchange rate is equal to 100 yen per one U.S. dollar, while the interest rate in dollars is 6% and the interest rate in yen is 1%. What is the approximate forward rate implied by the covered interest parity?
A) 95 yen per dollar B) 105 yen per dollar C) 107 yen per dollar D) 92 yen per dollar
please explain
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Essentials of Economics
Authors: Bradley Schiller, Karen Gebhardt
10th edition
125923570X, 978-1259235702
