For a European investor, what is the rate of return in euro on: “a ¥10,000 deposit in a Japanese bank in a year when the interest rate on Yen is 12 % and the Yen per euros exchange rate moves from ¥1.40 per euros to ¥1.20 per euros”   A. Compute the rate of return without the formula   B. Compute the approximation of this rate of return using the formula

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Chapter31: Open-Economy Macroeconomics: Basic Concepts
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For a European investor, what is the rate of return in euro on: “a ¥10,000 deposit in a Japanese bank in a year when the interest rate on Yen is 12 % and the Yen per euros exchange rate moves from ¥1.40 per euros to ¥1.20 per euros”

 

A. Compute the rate of return without the formula

 

B. Compute the approximation of this rate of return using the formula

 

 

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