-Suppose that S = ¥180/$. The annualized risk-free rates are 4.6% and 2.75% in Japan and the U.S., respectively. Find the expected currency movement over the next 3 years. Do not write any symbol. Express your answers as a percentage. Make sure to round your answers to the nearest 100th decimal points.
7-Suppose that S = ¥180/$. The annualized risk-free rates are 4.6% and 2.75% in Japan and the U.S., respectively. The annualized inflation rate is 2% in Japan. Find the exact real interest rate in Japan and the U.S. according to the international Fisher relation. Do not write any symbol. Express your answers as a percentage. Make sure to round your answers to the nearest 100th decimal points.
8-Assume the following information:
U.S. investors have $1,000,000 to invest:
1-year deposit rate offered on U.S. dollars = 12%
1-year deposit rate offered on Singapore dollars = 10%
1-year forward rate of Singapore dollars = $.412
Spot rate of Singapore dollar = $.400
Interest rate parity doesn’t exist. If U.S. investors engage in covered interest arbitrage, what yield will they earn? Do not write any symbol. Express your answers as a percentage. Make sure to round your answers to the nearest 100th percentage point. For example, write 12.89 for 12.89%.
