please answer all parts on a piece of paper Exercises: Parity conditions in real markets and...

Question

Question

please answer all parts on a piece of paper
Exercises: Parity conditions in real markets and financial markets EXERCISE 11 (Forward exchange rate) The interest rate in t

Exercises: Parity conditions in real markets and financial markets EXERCISE 11 (Forward exchange rate) The interest rate in t

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

90 day forward rate on the Japanese yen = $0.007692 * [(1 + 0.08 / 4) / (1 + 0.02 / 4)]
= $0.007692 * (1.02 / 1.005)
= $0.007692 * 1.0149
= $0.0078 (Rounded to 4 decimal places)

90 day forward rate on the Japanese yen = $0.0078

Add a comment

Answer 2

Similar Homework Help Questions

please answer all parts on a piece of paper Exercises: Parity conditions in real markets and...

please answer all parts on a piece of paper Exercises: Parity conditions in real markets and financial markets EXERCISE 10 (Forward exchange rate) If the Swiss franc is $0.68 on the spot market and the 180-day forward rate is $0.70, what is the annualized interest rate in the United States over the next six months? The annualized interest rate in Switzerland is 2%.
please answer all parts on a piece of paper Exercises: Parity conditions in real markets and...

please answer all parts on a piece of paper Exercises: Parity conditions in real markets and financial markets EXERCISE 6 (Purchasing Power Parity) The U.S. inflation rate is expected to average about 4% annually, and the South African rate of inflation is expected to average about 9% annually. If the current spot rate for the rand is $0.00800, what is the expected spot rate in two years?
please answer all parts on a piece of paper Exercises: Parity conditions in real markets and...

please answer all parts on a piece of paper Exercises: Parity conditions in real markets and financial markets EXERCISE 8 (Fisher effect & Purchasing Power Parity) If expected inflation is 100 percent in Venezuela and the real required return is 5 percent. a) What will the nominal interest rate be according to the Fisher effect? b) What can we expect to happen with the exchange rate of $/Bolivar, taking the different inflation rates into consideration, assuming that USA inflation is...

Derek Tosh and Yen-Dollar Parity. Derek Tosh is attempting to determine whether US/Japanese financial conditions are...

Derek Tosh and Yen-Dollar Parity. Derek Tosh is attempting to determine whether US/Japanese financial conditions are at parity. The current spot rate is a flat ¥89.00/$, while the 360-day forward rate is ¥84.90/$. Forecast inflation is 1.099% for Japan, and 5.896% for the US. The 360-day euro-yen deposit rate is 4.703%, and the 360-day euro-dollar deposit rate is 9.498%. a. Calculate whether international parity conditions hold between Japan and the United States. b. Find the forecasted change in the Japanese...
Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.01081, while...

Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.01081, while in the 90-day forward market 1 Japanese yen = $0.01084. In Japan, 90-day risk-free securities yield 2.1%. What is the yield on 90-day risk-free securities in the United States? Round your answer to two decimal places. Do not round intermediate calculations.
Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.01392, while...

Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.01392, while in the 90-day forward market 1 Japanese yen = $0.01395. In Japan, 90-day risk-free securities yield 2.5%. What is the yield on 90-day risk-free securities in the United States? Round your answer to two decimal places. Do not round intermediate calculations. %

Heidi Jensen is attempting to determine whether US/Japanese financial conditions are at parity. The current spot...

Heidi Jensen is attempting to determine whether US/Japanese financial conditions are at parity. The current spot rate is a flat ¥89.00/$, while the 360-day forward rate is ¥84.90/$. Forecast inflation is 1.100% for Japan, and 5.900% for the US. The 360-day yen deposit rate is 4.700%, and the 360-day dollar deposit rate is 9.500%. Calculate whether interest rate parity, purchasing power parity, and international fisher effect conditions hold between Japan and the US. Find the forecasted change in the Japanese...
can you please do all work in steps on a paper if possible Exercises: Parity conditions...

can you please do all work in steps on a paper if possible Exercises: Parity conditions in real markets and financial markets EXERCISE 4 (Purchasing Power Parity) We live in a four-country world where people only grow and eat coconuts. We have the following data: Brazil a Mexico Argentina United States Price of one BRL 2,000 MXN 5 ARS 1.5 USD 1.4 coconut Exchange rate MXN/BRL 400 ARS/BRL 1,200 USD/BRL 1,400 a) Does Purchasing Power Parity hold for the BRL...
Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.011, while...

Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.011, while in the 180-day forward market 1 Japanese yen = $0.0118. 180-day risk-free securities yield 1.4% in Japan. What is the yield on 180-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.

Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.011, while...

Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.011, while in the 180-day forward market 1 Japanese yen = $0.0112. 180-day risk-free securities yield 1.30% in Japan. What is the yield on 180-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.

please answer all parts on a piece of paper Exercises: Parity conditions in real markets and...

Homework Answers