Question
The current spot exchange rate is 90 /$. The current 5-year U.S. Treasury rate of 4%. A risk free 5-year zero coupon debt in Japan
The current spot exchange rate is 90 /$. The current 5-year U.S. Treasury rate of 4%. A risk free 5-year zero coupon debt in Japan has a yield of 2%. Assume for simplicity that both rates are annually compounded rates. Based on the Interest Rate Parity, what is the forward exchange rate, F5?
| a. | 81.67 | |
| b. | 99.18 | |
| c. | 91.76 | |
| d. | 93.60 | |
| e. | 88.26 |
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Global Banking
Authors: Roy C Smith, Ingo Walter, Gayle DeLong
3rd Edition
0195335937, 9780195335934
