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Three-month interest rates

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Reference no: EM133121276

Suppose that three-month interest rates (annualized) in Japan and the United States are 7% and 9%, respectively. If the spot rate is 142 IYP/U SD and the 90-day forward rate is 139 JPYfUSD.

a. Where would you invest?

b. Where would you borrow?

c. What arbitrage opportunity do these figures present?

Reference no: EM133121276

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