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Question
A Japanese investor can earn a 1% annual interest rate in Japan or about 3.5% per year in the United States. If the spot exchange rate is 101 yen to the dollar, at what one-year forward rate would an investor be indifferent between the U.S. and Japanese investments?
A. 100.58
B. 98.56
C. 101.68
D. 97.42
E. 103.50
Answer
This answer is hidden. It contains 26 characters.
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