Asset market model and exchange rates


This question regards international finance specifically the asset market model and exchange rates.

Assume the spot exchange rate between dollars and yen is e=$1/100yen. The interest rate on a 180 day dollar denominated assets is i($)=1% and the interest rate on comparable 180 day yen denominated assets is also i(yen)= 1%. The 180 day forward exchange rate between dollars and yen if e(forward)=$1/90 yen.

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Microeconomics: Asset market model and exchange rates
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