In the spot market 78 pesos can be exchanged for 1 us


1. Assume that interest rate parity holds. In both the spot market and the 90-day forward market 1 Japanese yen equals 0.0086 dollar. The 90-day risk-free securities yield 4.6 percent in Japan. What is the yield on 90-day risk-free securities in the United States?

2. In the spot market 7.8 pesos can be exchanged for 1 U.S. dollar. A compact disk costs $15 in the United States. If purchasing power parity holds, what should be the price of the same disk in Mexico?

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Management Theories: In the spot market 78 pesos can be exchanged for 1 us
Reference No:- TGS02164438

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