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# Six months T-bills have a nominal rate of 7%, while default

1- Six months T-bills have a nominal rate of 7%, while default free. Japanese bonds that mature in 6 months have a nominal rate of 5.5%. In the spot exchange market 1 yen equals \$0.009. If interest rate parity holds, what is the 5-month forward exchange rate?

2. A TV set costs \$500 in the United States. The same costs 550 Euros in france. If purchasing power parity holds, What is the spot exchange rate between the euro and the Dollar?-

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Six months T-bills have a nominal rate of 7%, while default free. Japanese bonds that mature in 6 months have a nominal rate of 5.5%. In the spot exchange market 1 yen equals \$0.009. If interest rate parity holds, what is the 5-month forward exchange rate?

2. A TV set costs \$500 in the United States. The ...

#### Solution Summary

1- Six months T-bills have a nominal rate of 7%, while default free. Japanese bonds that mature in 6 months have a nominal rate of 5.5%. In the spot exchange market 1 yen equals \$0.009. If interest rate parity holds, what is the 5-month forward exchange rate?

2. A TV set costs \$500 in the United States. The same costs 550 Euros in france. If purchasing power parity holds, What is the spot exchange rate between the euro and the Dollar?

\$2.19