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The spot Yen/US$ exchange rate is Yen 108.19/US$ and the one year forward rate is Yen 112.57/US$. If the annual interest rate on US dollar

The spot Yen/US$ exchange rate is Yen 108.19/US$ and the one year forward rate is Yen 112.57/US$. If the annual interest rate on US dollar CDs is 1.8%, what would you expect the annual interest rate to be on Yen CDs? 3.56% 4.39% 5.92% 2.70%

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