Question

Use the information in the table below to answer the following questions:

  

	in U.S. $	per U.S. $
Japanese yen	.009224	108.41
6-mos forward	.009313	107.38
British pound	1.5848	.6310
3-mos forward	1.5833	.6316

a.

The six-month forward rate for the Japanese yen is  per U.S. dollar. The yen is selling at a (Click to select)discountpremium because it is (Click to select)less expensivemore 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 (Click to select)premiumdiscount because it is (Click to select)more expensiveless 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.)

  

c.	Based on the information in the figure, the value of the U.S. dollar will (Click to select)fallrise with respect to the yen and will (Click to select)fallrise with respect to the British pound.

Answer 1

From the table we see that

1.
107.38

2.
premium

3.
more

4.
0.6316

5.
discount

6.
less

7.
fall

8.
rise