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Question
Assume the following: the current spot rate S/$ = 100.0 and the annual interest rates: iJAPAN = 2% and iUS = 10%. According to covered interest parity, if an intern at Citibank sets the one-year forward rate: F360/$ = 91, then:
a. the intern has correctly set the forward rate.
b. both U.S. and Japans investment returns are equal.
c. the Japans investment return exceeds the U.S. investment return
d. the U.S. investment return exceed the Japans investment return
Answer
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Related questions
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