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  3. the nominal yield on 6-month t-bills is 7%, while

The nominal yield on 6-month T-bills is 7%, while default-free Japanese bonds that mature in 6...

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Finance

The nominal yield on 6-month T-bills is 7%, while default-freeJapanese bonds that mature in 6 months have a nominal rate of 5%.In the spot exchange market, 1 yen equals $0.011. If interest rateparity holds, what is the 6-month forward exchange rate? Round theanswer to five decimal places. Do not round intermediatecalculations.

Answer & Explanation Solved by verified expert
3.6 Ratings (643 Votes)
Interest rate parity holds that investors should earn the same return on interestbearing investments in all countries aftere adjusting for risk It recognizes that when you invest in a country other than your home country you are affected by two forces    See Answer
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