What is the 6-month forward exchange rate

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Reference no: EM133001886

Part a: If Japan imports less goods from abroad than its exports, foreigners will tend to have a deficit of Yen. What will this do to the value of the Yen with respect to foreign currencies? What is the corresponding effect on foreign investment in France?

Part b: If the Canadian dollar appreciates against the US dollar, can a US dollar buy more or fewer Canadian dollars as a result?

Part c: Six-month T-bills have a nominal rate of 14%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 11.0%. In the spot exchange market, one yen equals $0.012. If interest rate parity holds, what is the 6-month forward exchange rate?

Reference no: EM133001886

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