Solved: The spot exchange rate is 120 japanese yens per us dollar, Financial Management

The spot exchange rate is 120 japanese yens per us dollar

Question

If the interest rate in the Japan is 5%, the interest rate in the U.S. is 10%, the spot exchange rate is 120 Japanese yens per U.S. dollar, what must be the forward exchange rate to prevent covered interest arbitrage?

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Financial Management: The spot exchange rate is 120 japanese yens per us dollar

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Financial Management: The spot exchange rate is 120 japanese yens per us dollar

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