Question
Use the information below to answer the following questions. Currency per U.S. $ Australia dollar 1.2383 6-months forward 1.2350 Japan Yen 100.3900 6-months forward 99.9900
Use the information below to answer the following questions. |
Currency per U.S. $ | |
Australia dollar | 1.2383 |
6-months forward | 1.2350 |
Japan Yen | 100.3900 |
6-months forward | 99.9900 |
U.K. Pound | .6791 |
6-months forward | .6782 |
Suppose interest rate parity holds, and the current risk-free rate in the United States is 3 percent per six months. Use the approximate interest rate parity equation to answer the following questions. |
Requirement 1: |
What must the six-month risk-free rate be in Australia? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Risk-free rate | % |
Requirement 2: |
What must the six-month risk-free rate be in Japan? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Risk-free rate | % |
Requirement 3: |
What must the six-month risk-free rate be in Great Britain? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Risk-free rate | % |
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