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    Interest rate parity

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    Six-month t-bills have a nominal rate of 7 percent, while default-free Japanese bonds that mature in 6 months have a nominal rate of 5.5 percent. In the spot exchange market, 1 Yen equals $0.009. If interest parity holds, what is the 6-month forward exchange rate?

    Please show calculations.

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    https://brainmass.com/business/foreign-exchange-rates/interest-rate-parity-199461

    Solution Preview

    Six-month t-bills have a nominal rate of 7 percent, while default-free Japanese bonds that mature in 6 months have a nominal rate of 5.5 ...

    Solution Summary

    The solution calculates 6-month forward exchange rate, given spot rates and interest rates.

    $2.49

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