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Suppose that in 2023 one- and two-year interest rates are 5.6% in the United States and 1.1% in Japan. The spot exchange rate is 120.22/$.
Suppose that in 2023 one- and two-year interest rates are 5.6% in the United States and 1.1% in Japan. The spot exchange rate is 120.22/$. Suppose that one year later interest rates are 3% in both countries, while the value of the yen has appreciated to 114.88/$. a. Benjamin Pinkerton from New York invested in a U.S. two-year zero-coupon bond at the start of the period and sold it after one year. What was his return?
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