What must the interest rate in japan on an investment of


You are Microsoft's CFO and have an extra U.S. $1B to invest for six months. You are considering the purchase of U.S. T-bills that yield 1.7975% (that's a six month rate, not an annual rate) and have a maturity of 26 weeks. The spot exchange rate is $1.00 = ¥103.732, and the six month forward rate is $1.00 = ¥111.879. What must the interest rate in Japan (on an investment of comparable risk) be before you are willing to consider investing there for six months?

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