The spot exchange rate is 100 acute100 and the six month


Suppose that you are the treasurer of IBM with an extra US$1,000,000 to invest for six months. You are considering the purchase of U.S. T-bills that yield 1.810% (that's a six month rate, not an annual rate by the way) and have a maturity of 26 weeks. The spot exchange rate is $1.00 = ´100, and the six month forward rate is $1.00 = ´110. 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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Business Management: The spot exchange rate is 100 acute100 and the six month
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