The spot rate between japan and the us is yen10402 1 while, Financial Management

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The spot rate between japan and the us is yen10402 1 while

The spot rate between Japan and the U.S. is ¥104.02 = $1, while the 1-year forward rate is ¥105.13 = $1. A 1-year risk-free security in the U.S. is yielding 4.2%. What is the rate of return on a 1-year risk-free security in Japan assuming that interest rate parity exists? (Please explain the calculation.)

a. 5.08%

b. 4.67%

c. 5.31%

d. 2.09%

e. 1.88%

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