1. In early 1989, Japanese interest rates were about 4 percentage points below U.S. interest rates. The wide difference between Japanese and U.S. interest rates prompted some U.S. real estate developers to borrow in yen to finance their projects. Spell out the sequence of the transactions. Comment on this strategy.
2. The nominal interest rate in France is 3.5%, and expected French inflation is 2.0%. What is the real interest rate in France?
3. Find the APR, or stated rate, in each of the following cases (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.): Stated Rate (APR) Number of Times Compounded Effective Rate (EAR) % Semiannually 11.6 % Monthly 12.5 Weekly 10.2 Infinite 13.9