The nominal yield on 6-month T-bills is 7%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 3%. In the spot exchange market, 1 yen equals $0.012. If interest rate parity holds, what is the 6-month forward exchange rate? Do not round intermediate calculations. Round your answer to five decimal
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- Assume that interest rate parity holds. In both the spot market and the 90-day forward market, 1 Japanese yen equals 0.0088 dollar. In Japan, 90-day risk-free securities yield 4.4%. What is the yield on 90-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.5. If the 60-day interest rates (simple, p.a.) are 3% at home (usd) and 4% abroad (eur) and thespot rate moves from 1.000 to 1.001:(a) What is the return differential, and what is the corresponding prediction of the change in the forward rate? (b) What is the actual change in the forward rate?(c) What is the predicted change in the swap rate computed from the return differential?(d) What is the actual change in the swap rate?Assume the spot price of the British pound is currently $1.65. If the risk-free interest rate on 1-year government bonds is 4.5% in the United States and 6.3% in the United Kingdom, what must be the forward price of the pound for delivery 1 year from now? (Round your answer to 3 decimal places. Omit the "$" sign in your response.) Forward price
- The nominal annual interest rate on 6-month USD Treasury Bill is 4.50%. The spot rate of the Euro is $3.8643, and the 6-month forward rate of the Euro is $3.8880. If interest rate parity holds, what is the nominal annual interest rate on a risk and default free 6-month Euro bonds?Immersive Reader A. 12.35% B. 3.25% C. 10.20% D. 2.20%In a market with an unchanged current exchange rate where the interest parity condition holds, if investors now expect the exchange rate to be 6.25% lower a year from now, the return on foreign bonds with an interest rate of 5.75%would be ____enter your response here%. (Enter your response rounded to two decimal places.)Assuming that interest rate parity holds. In both the spot market and the 90 day forward market, 1 Japanese ye equals .0089 dollar. In Japan, 90-day risk free securities yield 4.3%. What is the yield on 90-day risk free securities in the US? Do not round intermediate calculations. Round your answer to two decimals places.
- Today, interest rates on 1-year T-bonds yield 1.2%, interest rates on 2-year T-bonds yield 2.6%, and interest rates on 3-year T-bonds yield 3.7%.a. If the pure expectations theory is correct, what is the yield on 1-year T-bonds one year from now? Be sure to use a geometric average in your calculations. Round your answer to four decimal places. Do not round intermediate calculations. b. If the pure expectations theory is correct, what is the yield on 2-year T-bonds one year from now? Be sure to use a geometric average in your calculations. Round your answer to four decimal places. Do not round intermediate calculations. c. If the pure expectations theory is correct, what is the yield on 1-year T-bonds two years from now? Be sure to use a geometric average in your calculations. Round your answer to four decimal places. Do not round intermediate calculations.Suppose the spot price of the British pound is currently $1.50. If the risk-free interest rate on one-year government bonds is 4% in the United States and 3% in the United Kingdom, what must the forward price of the pound be for delivery one year from now? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Assume that interest rate parity holds and that 90-day risk-freesecurities yield a nominal annual rate of 3% in the United States and a nominal annual rateof 3.5% in the United Kingdom. In the spot market, 1 pound = $1.29.a. What is the 90-day forward rate?b. Is the 90-day forward rate trading at a premium or a discount relative to the spot rate?
- Given the following data: R= $1.00N100 F=$1.00N90 lus 5% If the interest parity condition is expected to hold, interest rates in Japan (anan) should equal % (enter your answer as a percentage rounded to two dToday, interest rates on 1-year T-bonds yield 1.6%, interest rates on 2-year T-bonds yield 2.3%, and interest rates on 3-year T-bonds yield 3.8%. a. If the pure expectations theory is correct, what is the yield on 1-year T-bonds one year from now? Be sure to use a geometric average in your calculations. Do not round intermediate calculations. Round your answer to four decimal places. % b. If the pure expectations theory is correct, what is the yield on 2-year T-bonds one year from now? Be sure to use a geometric average in your calculations. Do not round intermediate calculations. Round your answer to four decimal places. % c. If the pure expectations theory is correct, what is the yield on 1-year T-bonds two years from now? Be sure to use a geometric average in your calculations. Do not round intermediate calculations. Round your answer to four decimal places. %Suppose that the 90-day forward rate is $1.17/€, the current spot rate is S1.20/€, and you expect the future spot rate in 90 days to be S1.21/€. If the standard deviation of the 90-day rate of appreciation of the euro relative to the dollar is 2% (in terms of the current spot rate), what range covers 95.46% of your possible profits and losses (assume a normal distribution on the future spot rate)? O a. [-S0.032, SO.112] O b. [-S0.008, S0.0OSS] O . [S0.023, S0.075] O d. [S0.016, S0.064]