Use the information below to answer the following questions.
Currency per U. S. $
Australia...
Use the information below to answer the following questions.
Currency per U. S. $
Australia dollar 1.2376
6-months forward 1.2357
Japan Yen 100.3200
6-months forward 100.0600
U. K. Pound .6793
6-months forward .6780
Suppose interest rate parity holds, and the current risk-free rate in the United States is 3 percent per six months. Use the approximate interest rate parity condition to answer this question.
a. What must the six-month risk-free rate be in Australia? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)b. What must the six-month risk-free rate be in Japan? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)c. What must the six-month risk-free rate be in Great Britain? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)
Answers: 1
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