Question

Use the information in the table below to answer the following questions: Japanese yen 6-mos forward British pound 3-mos forward in U.S. S 009232 .009318 1.5863 1.5855 per U.S. 108.32 107.32 6304 .6307 a. The six-month forward rate for the Japanese yen is per U.S. dollar. The yen is selling at a premium because it is more expensive in the forward market than in the spot market. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. The three-month forward rate for the British pound is per U.S. dollar. The British pound is selling at a discount because it is less expensive in the forward market than in the spot market. (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) with respect c. Based on the information in the figure, the value of the U.S. dollar will fall to the yen and will rise with respect to the British pound, References eBook & Resources

Answer 1

a. the six month forward rate for the Japanese yen is 107.32 per U S. dollar. the yen is sellling at a premium because it is more expensive in the forward market than in the spot market.

b. the three month forward rate for the british pound is 0.6307 per U.S. dollar. the british pound is selling at a discount because it is less expensive in the forward market than in the spot market.

c. Based on the information in the figure, the value of the U.S. dollar will fall with respect to the yen and will rise with respect to the British pound.