The dollar change in value during the next year

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Reference no: EM131109676

The current spot exchange rate is S0¥/$ = ¥190/$ and the 1-year forward rate is F1¥/$ = ¥210/$. The prime rate in the United States is 15 percent.

a. What should the Japanese prime rate be?

b. According to forward parity, by how much should the dollar change in value during the next year?

Reference no: EM131109676

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