Determine what is the six-month forward exchange rate

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Interest Rate Parity

Problem 1: The nominal yield on 6-month T-bills is 4%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 3.5%. In the spot exchange market, 1 yen equals $0.01. If interest rate parity holds, what is the 6-month forward exchange rate? Do not round intermediate calculations. Round answer to five decimal places.

Reference no: EM132722385

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