What is the lowest future exchange rate

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A. The 1year interest rate in the US is 10% and the 1year interest rate in Japan is 5%. Does this present a riskless way to raise capital at a low interest rate?

B. The 1year interest rate in the US is 10% and the 1 year interest rate in Japan is 5%. If the current spot exchange rate is JPY 140 /USD What is the lowest future exchange rate at which borrowing in JPY is cheaper than borrowing in USD?

Reference no: EM133204723

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