1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
irina1246 [14]
2 years ago
14

Suppose that the risk-free rates in the United States and in Japan are 5.25% and 4.5%, respectively. The spot exchange rate betw

een the dollar and the yen is $0.008828/yen. What should the futures price of the yen for a one-year contract be to prevent arbitrage opportunities, ignoring transactions costs
Business
1 answer:
kotegsom [21]2 years ago
6 0

Answer:

$0.008891/Yen

Explanation:

The computation of arbitrage free rate is shown below:-

Fair forward rate = Spot rate × (1 + Interest rate US) ÷ (1 + Interest Rate Japan)

= 0.008828 × (1 + 5.25%) ÷ (1 + 4.5%)

= $0.00889135885/Yen

or

= $0.008891/Yen

Therefore for computing the arbitrage free rate we simply applied the above formula.

You might be interested in
____ occurs when soldiers or employees follow questionable orders, such as when nurses willingly follow a physician's order to g
harina [27]
_
BLIND OBEDIENCE occurs when soldiers or employees follow questionable orders, such as when nurses willingly follow a physician's order to give a patient a dangerously high dosage of medication.
5 0
3 years ago
The Whalers are interested in trading their star left tackle. He is a veteran and makes $1.6 million per year. They are consider
Romashka-Z-Leto [24]

Answer:

$1,800,000

Explanation:

The veteran player makes $1.6 million per year.

The new prayer will be paid $1 million per year.

the Savings per year will be

= $1, 600,000 - 1,000,000

= $ 600,000

The savings in three years will be

=$600,000 x 3

=$1,800,000

3 0
3 years ago
Pedro's child attends a school operated by the church the family attends. Pedro made a donation of $1,000 to the church in lieu
schepotkina [342]

Answer:

$800

Explanation:

Pedro's tuition costs of $6,000 is a personal expense and does not qualify as a charitable contribution.

Pedro's donation to the church of $1,000 is charity, but he has to deduct the registration fee of $200 from it. Thus, his total charitable contribution is $1,000 - $200 = $800

4 0
3 years ago
How do I start a plan
miskamm [114]

Answer:

plan

Explanation:

4 0
3 years ago
Read 2 more answers
One of the biggest problems associated with renting a home is:
olga_2 [115]

Answer:

The money invested does not build wealth

Explanation:

7 0
3 years ago
Read 2 more answers
Other questions:
  • A bakery stocks up on pumpkin flavoring in august because there is a high demand for pumpkin-flavored baked goods in the fall. t
    15·1 answer
  • How do the Iowa Caucuses work?
    12·1 answer
  • Financial aid that is given based on a family financial background is called ____ aid.
    8·2 answers
  • If each bank in the United States had to keep 100 percent of checkable deposits as reserves, each $1 the Federal goverment injec
    6·1 answer
  • Suppose that there are many stocks in the security market and that the characteristics of stocks A and B are given as follows: S
    11·1 answer
  • Lindy's Flowers, Etc. purchased a delivery van for $60,000. The company was given a $4,000 cash discount by the dealer, and paid
    11·1 answer
  • Which of the following statements about entrepreneurs is FALSE? A. Entrepreneurs are people who start a new business. B. Entrepr
    5·1 answer
  • Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 9.7 percent, a YTM of 7.7 percent, and has 14
    9·1 answer
  • In each of the following cases, determine how supply or demand shifts and how the equilibrium changes.
    10·1 answer
  • Explain why it might be difficult for a new,
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!