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?
1 answer:
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
You might be interested in
Given :
Bud exchanges land with an adjusted basis of $ 22,000 and a fair market value of $ 30,000 for another parcel of land with a fair market value of $ 28,000 and $2,000 cash.
To Find :
What is Bud's recognized gain or loss.
Solution :
This is a transaction of like kind exchange.
So, gain or loss to be recognized is :
Therefore, option B) is correct.