Assume that interest rate parity holds. In both the spot market and the 90-day forward market 1 Japanese yen = 0.0086 dollar. And 90-day risk-free securities yield 4.6% in Japan. What is the yield on 90-day risk-free securities in the United States?© BrainMass Inc. brainmass.com March 4, 2021, 9:26 pm ad1c9bdddf
Solution contains step-by-step calculation of periodic interest rate in the home country. It includes the appropriate formula required by the question. This step-by-step calculation provides students with a clear perspective of interest rate parity.