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julia-pushkina [17]
3 years ago
9

On August 8th the​ three-month risk-free rate of interest in the United States was 3.75 percent and it was 3.00 percent in Japan

. If the spot exchange rate were ​$0.010798​/yen​, what would you expect the forward exchange rate to​ be?

Business
1 answer:
weeeeeb [17]3 years ago
6 0

Answer:

The answer is 0.01082

Explanation:

The formula for forward exchange rate is:

F = S x 1+rd/1+rf

where F is the forward exchange rate

S is the spot exchange rate(0.010798)

rd is the foreign currency interest rate(3% or 0.03)

rf is the domestic interest rate(3.75% or 0.0375

Month is 3 months(90days) and total number of days in a year is 360days.

Find find the attached file for calculation

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Answer:

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Explanation:

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Explanation:

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