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Question 1: Consider an investor, Yuna, whe is bused in Tokyo. The annual interest rates in Japan, the U.S., and New Zealand respectively are iur =1%, tes =4%, isz =7%. The exchange rates of Japanese Yea (JPY) and New Zealand Dollar (NZD) against the USD respectively are 1JPY=0.01USD and 1.NZD=0.700SD ( (note that these exchange rates are being quoted in the USD numetiare). We assume that these are neither bid/ask spreals nor arbitrage opportuaities. 1a/. From Yuna's perspective and for one-year borinon: L USD traded at a forward premiam or a forward disoount against JPY? Is NZD traded at a forward premium or a forward discount 1 against JPY? (Innt: to answer thas question, you nend to compute the one-year forward exchange rutes of USD and NZD agamst JPY). 1b) Using historical data, Yunn does some rescarch by regressing obe-year % changes in the the currency trading strategy suggoted by this regression to Yuna? What is Yuna's erpected profit (in JPY') in one year per a notional value 1milJPY if sbe follows this trading strategy? (Hint: to answer this vuestion, you migut sont to consult a similar problem in E.g. 5.6, Lectere Note 5 Part 2 . Note that in that eg. we tabe the persepctive of an US meestor. Here, we are taking the perspective of a Japanese intestor). lc/ Using historical data, Yana doen bame rescarch by tegressing one-year % changen in the exchange rate sa,19na/2 on the one-year forward pecmina f/N/w/p of NZD against JPY [ obtaining the currency trading otrategy suggented by this regremion to Yuna? What is Yuna's erpected profit (in JPY) in oac year per a notional valoe I mil JPY if she follows this trading otrategy? Question 1: Consider an investor, Yuna, whe is bused in Tokyo. The annual interest rates in Japan, the U.S., and New Zealand respectively are iur =1%, tes =4%, isz =7%. The exchange rates of Japanese Yea (JPY) and New Zealand Dollar (NZD) against the USD respectively are 1JPY=0.01USD and 1.NZD=0.700SD ( (note that these exchange rates are being quoted in the USD numetiare). We assume that these are neither bid/ask spreals nor arbitrage opportuaities. 1a/. From Yuna's perspective and for one-year borinon: L USD traded at a forward premiam or a forward disoount against JPY? Is NZD traded at a forward premium or a forward discount 1 against JPY? (Innt: to answer thas question, you nend to compute the one-year forward exchange rutes of USD and NZD agamst JPY). 1b) Using historical data, Yunn does some rescarch by regressing obe-year % changes in the the currency trading strategy suggoted by this regression to Yuna? What is Yuna's erpected profit (in JPY') in one year per a notional value 1milJPY if sbe follows this trading strategy? (Hint: to answer this vuestion, you migut sont to consult a similar problem in E.g. 5.6, Lectere Note 5 Part 2 . Note that in that eg. we tabe the persepctive of an US meestor. Here, we are taking the perspective of a Japanese intestor). lc/ Using historical data, Yana doen bame rescarch by tegressing one-year % changen in the exchange rate sa,19na/2 on the one-year forward pecmina f/N/w/p of NZD against JPY [ obtaining the currency trading otrategy suggented by this regremion to Yuna? What is Yuna's erpected profit (in JPY) in oac year per a notional valoe I mil JPY if she follows this trading otrategy

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