Question
Use Table 27-1 to answer the following questions: a. How many Japanese yen do you get for your dollar? (Round your answer to 3 decimal
Use Table 27-1 to answer the following questions: |
a. | How many Japanese yen do you get for your dollar? (Round your answer to 3 decimal places.) |
Amount |
b. | What is the one-month forward rate for yen? (Round your answer to 4 decimal places.) |
Forward rate |
c. | Is the yen at a forward discount or premium on the dollar? | ||||
|
d. | Use the one-year forward rate to calculate the annual percentage discount or premium on yen. (Input the value as a positive value. Round your answer to 2 decimal places.) |
(Click to select)Annual percentage premiumAnnual percentage discount | % |
e. | If the one-year interest rate on dollars is 1.5% annually compounded, what do you think is the one-year interest rate on yen? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
Interest rate | % |
f. | According to the expectations theory, what is the expected spot rate for yen in three months time?(Round your answer to 4 decimal places.) |
Expected spot rate |
g. | According to purchasing power parity theory, what then is the expected difference in the three-month rate of price inflation in the United States and Japan? (Do not round intermediate calculations. Round your answer to 3 decimal places.) |
Inflation in Japan over the 3 months is expected to be % (Click to select)greater thanless than in |
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