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Indifferent between buying dollar bond and yen bonds

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Reference no: EM131486568

Suppose you have $100,000 and the exchange rate between the dollar and the yen in the one-year forward market is ef = 80¥/$. If the interest rates on the one-year dollar and yen bonds are i$ = 0.02 and i¥ = 0.01, what spot exchange rate (yens per dollar) makes you indifferent between buying dollar bond and the yen bonds?

Reference no: EM131486568

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