1. Suppose that the dollar-yen spot exchange rate is 120/$ and the 90-day forward exchange rate is 121.2/$, the 90-day interest rate in Canada is2%. Assume that covered interest parity holds.
   1. From the Japanese perspective, is there a forward premium or forward discount? How much is the premium discount?
   2. What is the Japanese interest rates?
   3. If Canada raises interest rate to 2.01%, while interest rate in Japan remain unchanged, how would that affect the exchange rate between dollar and yen? What is the new forward premium (discount)?