Asset market model and exchange rates.

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Suppose the spot exchange rate in dollars and yen is e=$1/100yen. The interest rate on a 6 months dollar denominated assets is i($)=1 percent and interest rate on comparable 6 months yen denominated assets is also i(yen)= 1%. The 180 day forward exchange rate between dollars and yen if e(forward)=$1/90 yen.

Reference no: EM1367781

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