The nominal rate of interest on six-month, risk-free U.S. securities is 6%. In the spot market, $1 U.S. = 104.84 Japanese yen. In the six-month forward market, $1 U.S. = 104.84 Japanese yen. If interest rate parity holds, what is the current nominal interest rate on six-month, risk-free Japanese securities?
In 1998, a particular Japanese imported automobile sold for 1,476,000 yen or $8,200. If the car still sells for the same amount of yen today but the current exchange rate is 144 yen per dollar, what is the car selling for today in U.S. dollars?
Lewis Interiors imports lumber from Canada. Each unit costs 8 Canadian dollars. The company sells the lumber in its European stores for 8 euros. Currently exchange rates are:
· $1 Canadian = $0.6784 U.S.
· 1 euro = $0.9406 U.S.
How much profit measured in U.S. dollars does Lewis make on each unit of lumber sold?