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What is covered interest rate parity (CIP)? A Japanese investor can earn a 0.5% annual interest rate in Japan or about 2.5% per year in

What is covered interest rate parity (CIP)? A Japanese investor can earn a 0.5% annual interest rate in Japan or about 2.5% per year in the United States. If the spot exchange rate is 101 yen to the dollar, at what one-year forward rate would an investor be indifferent between the U.S. and Japanese investments?

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