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The interest rate in Japan is 1%. The yen to dollar spot exchange rate is 100 per dollar and the forward premium for the yen

The interest rate in Japan is 1%. The yen to dollar spot exchange rate is 100 per dollar and the forward premium for the yen is 5% for the one year ahead forward contract. What is the US interest rate as per the Covered Interest Rate Parity?

		Approximately 4%
		Approximately 6%

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