Use Table 27-1 to answer the following questions:

1. How many Japanese yen do you get for your dollar? (Round answer to 2 decimal places.)
2. What is the three-month forward rate for yen? (Round answer to 2 decimal places.)
3. Is the yen at a forward discount or premium on the dollar?
4. Use the one-year forward rate to calculate the annual percentage discount or premium on yen. (Enter your answer as a positive value. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
5. If the one-year interest rate on dollars is 2.5% annually compounded, what do you think is the one-year interest rate on yen? (Do not round intermediate calculations. Enter answer as a percent rounded to 4 decimal places.)
6. According to the expectations theory, what is the expected spot rate for yen in three months time? (Round answer to 2 decimal places.)
7. 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? (rounded to 3 decimal places.)

A.	Amount:
B.	Forward Rate:
C.	Yen is at a forward:		on the dollar
D.	Annual Percentage Premium		%
E.	Interest Rate		%
F.	Expected Spot Rate
G.	Inflation in Japan over the 3 months is expected to be		%		than in the United States