stainht 14. A Japanese investor can earn a I percent annual interest rate in Japan or about 3.5 percent per year in the United States. If the spot exchange rate is 101 yen to the dollar, at what one-year forward rate would an investor be indifferent between the U.S. and Japanese investments? A. VI00.58 B. 98.56 C. V101.68 D. 197.42 E. VI03.50 An investor starts with $1 million and converts it to 0.75 million pounds, which is then invested for one year. In a year the investor has 0.7795 millice pounds, which she then converts to dollars at an exchange rate of 0.72 pounds per dollar. The U.S. dollar anual rate of return eamed was 15.

Question
stainht
14. A Japanese investor can earn a I percent annual interest rate in Japan or about 3.5 percent per
year in the United States. If the spot exchange rate is 101 yen to the dollar, at what one-year
forward rate would an investor be indifferent between the U.S. and Japanese investments?
A. VI00.58
B. 98.56
C. V101.68
D. 197.42
E. VI03.50
An investor starts with $1 million and converts it to 0.75 million pounds, which is then
invested for one year. In a year the investor has 0.7795 millice pounds, which she then
converts to dollars at an exchange rate of 0.72 pounds per dollar. The U.S. dollar anual
rate of return eamed was
15.

Image Transcription

stainht 14. A Japanese investor can earn a I percent annual interest rate in Japan or about 3.5 percent per year in the United States. If the spot exchange rate is 101 yen to the dollar, at what one-year forward rate would an investor be indifferent between the U.S. and Japanese investments? A. VI00.58 B. 98.56 C. V101.68 D. 197.42 E. VI03.50 An investor starts with $1 million and converts it to 0.75 million pounds, which is then invested for one year. In a year the investor has 0.7795 millice pounds, which she then converts to dollars at an exchange rate of 0.72 pounds per dollar. The U.S. dollar anual rate of return eamed was 15.

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