Use the following information to answer the next three questions.

Oneyear interest rates foridentical investments in Japan and Canada are 7% and 2%, respectively.The current exchange rates for the two currencies are as follows: C$1.25/$, $.008/ . What should be the one year forward rate according to IRP?(Assume Japan is the home country and round intermediate steps to four decimals.)

• 95.33/C$
• 99.05/C$
• 104.9/C$
• 95.10/C$

Suppose the one year forward rate is 106.5/C$. Calculate the actual forward premium/discount, assuming Japan is the home country.Round intermediate steps and your final answer four decimals. Enter your answer in decimal format (EX:.XXXX).

Suppose the one year forward rate is 106.5/C$.Find the percentage return that can be earned via covered interest arbitrage, assuming that Japan is the domestic nation.Round intermediate steps and your final answer to four decimals and enter your answer in decimal format (EX: .XXXX).