Question

In the Spot Market, $ 1=J.Yen 108.7 i.e, $/Japanese Yen=108.7

If the Inflation rates in the USA and JAPAN are projected as 1,6% and 0.2% respectively, calculate how many J.Yens you would need to get 1$ after 1 years time, and write which currency has Re-valued and which one has De-valued.

Answer #1

In the Spot Market, $ 1=J.Yen
108.7 i.e, $/Japanese Yen=108.7
If the Inflation rates in the USA and JAPAN are projected as
1,6% and 0.2% respectively, calculate how many J.Yens you would
need to get 1$ after 1 years time, and write which currency has
Re-valued and which one has De-valued.

Assume the spot exchange rate is 106.90 Japanese yen per U.S.
dollar. If the inflation rate in the U.S. is expected to be 2% and
the inflation rate in Japan is 1% for the next two years, then
the:
exchange rate will increase.
exchange rate will double.
dollar will appreciate relative to the yen.
dollar will become more valuable.
Yen will strengthen against the dollar.

The spot exchange rates for Japanese yen are $0.0082/¥ and
$0.0098/¥. Calculate the indirect ask rate for yen.
Answer format: keep four decimals and include the price
currency. Examples: 2.3021 (dollar); 2.3021 (yen).

The following are the spot and forward bid and ask rates for the
Japanese yen/U.S. dollar (¥/$) exchange rate from January 20, 2011.
By referring to these rates, answer the following questions (the US
dollar is the home currency):
Period Yen/$ Bidrate Yen/$ Ask Rate spot 85.41 85.46
1 month 85.02 85.05
2 months 84.86 84.90
3 months 84.37 84.42
a) Calculate the mid-rate for these maturities
b) Calculate the annual forward premium for these maturities

You have the following market data.
Spot price of the Japanese Yen is $0.009185.
Underlying asset for the Japanese Yen futures contract is
12,500,000 Yen.
3-month Japanese LIBOR rate is 2.14% per year, and the 3-month
U.S. LIBOR rate is 2.76% per year. Both rates are continuously
compounded.
Japanese Yen futures contract that expires in 3 months has a
futures price of $0.009030.
What is the general arbitrage strategy?
A. Take a short position in the futures contract, borrow yen...

1. You are given the following information. The Japanese
currency is called the yen. The Korean currency is the won. The
current nominal interest rate for a 1-year yen deposit in a
Japanese bank is 1% (0.01), and it is 5% (0.05) for a deposit in a
Korean bank. - The current spot exchange rate between the Japanese
yen and Korean won (yen/won) is 100 that is one hundred yen to
purchase one won. Answer the following questions. Make clear...

Barry speculates in the foreign currency exchange market.
Currently the spot price for the Japanese yen is ¥129/$ and the
6-month forward rate is ¥128 /$. Barry believes the yen will become
¥126.00/$ in the next six months.
To profit as a speculator, Barry should ________ at ________
.
Select one:
a. buy dollars; the forward rate
b. sell yen; the forward rate
c. buy yen; the forward rate
d. buy dollars; spot rate

One year ago, the spot exchange rate between Japanese yen and
Swiss franc was S_1Y/SFR = ¥160/SFr/ Today, the spot
rate is S_0 ^¥/Sfr = ¥155/SFr. Inflation during the year was p^¥ =
2 percent and p^SFr= 3 percent in Japan and Switzerland,
respectively.
a.) What was the percentage change in the nominal value of the
Swiss franc?
b.) One year ago, what nominal exchange rate would you have
predicted for today based on the difference in inflation rates?
c.)...

11. Suppose that on January 1, the
cost of borrowing Japanese yen for the year is 4%. Market
expectation for the inflation is 3% in the U.S. and 2% in Japanese.
At the same time, the spot rate is ¥111.2/$ on January 1 while the
12 month forward rate is ¥108.5/$.
a. What is the interest rate expected in U.S. if the interest
rate parity holds?
What is the real interest rate in Japan and what is the real
interest...

Suppose Japanese yen money market annual rate is .60% and U.S.
money market has an annual rate of 4.50%. The predictions on the
spot rate in 6 months made by financial analysts X and Y are ¥116/$
and ¥114/$ respectively. If the spot rate today is ¥115/$, which
prediction do you think is more reasonable, why?
A) Analysts X, because US dollar interest is higher than
Japanese yen, so ¥ should appreciate against $.
B) Analysts X, because US dollar...

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