1. The spot yen/ exchange rate is 145.94 yen/. The 4 month forward rate is...
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1. The spot yen/ exchange rate is 145.94 yen/. The 4 month forward rate is 147 yen/. What is the yen's forward premium (or discount) on the pound, expressed as an annual percentage? a. 0.721 percent discount b. 2.88 percent premium c. 0.721 percent premium d. 2.163 percent discount 2. The Swiss economy is predicted to average inflation at 4 percent per year. The inflation forecast for the United States is 6 percent per year. If the current exchange rate is 1.4SF/$, what should be the expected exchange rate one year from now in order to avoid arbitrage? a. 1.4SF/S b. 1.4275F/$ c. 1.373SF/$ d. none of the above
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