a)
To find: Whether yen is expected to get stronger or weaker.
Introduction:
The rate of exchange at which the bank agrees to exchange a currency for another currency at a future date when it comes into a forward contract with an investor is a forward exchange rate. The price to exchange a currency for another currency at an immediate delivery is the spot exchange rate.
b)
To find: The difference between the annual inflation rate of Country J and Country U.
Introduction:
The rate of exchange at which the bank agrees to exchange a currency for another currency at a future date when it comes into a forward contract with an investor is a forward exchange rate. The price to exchange a currency for another currency at an immediate delivery is the spot exchange rate.
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