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Use the information below to answer the following questions. Australia dollar Currency per U.S. $ 1.2907 6-months forward 1.2898 Japan Yen 109.20 6-months forward
Use the information below to answer the following questions. Australia dollar Currency per U.S. $ 1.2907 6-months forward 1.2898 Japan Yen 109.20 6-months forward 111.21 U.K. Pound .7190 6-months forward .7187 Suppose interest rate parity holds, and the current risk-free rate in the United States is 2.1 percent per six months. a. What must the six-month risk-free rate be in Australia? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What must the six-month risk-free rate be in Japan? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. c. What must the six-month risk-free rate be in Great Britain? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Australia % b. Japan % c. Great Britain %
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