Question: 10-) You can use interest rate parity to answer this question. A U.S. investor has a choice between a risk-free one-year U.S. security with

10-) You can use interest rate parity to answer this question. A

10-) You can use interest rate parity to answer this question. A U.S. investor has a choice between a risk-free one-year U.S. security with an annual return of 3%, and a comparable Turkish security with a return of 25%. If the spot rate is 18.6 TL/$, the forward rate is 24.4 TL/$, and there are no transaction costs, where should the investor invest, in Turkey or in the U.S.? Please explain. 11-) The current U.S. dollar- Turkish lira spot rate is 18.6TL/$. If the 90-day forward exchange rate is 19.4 TL/$ then what is the forward premium (per annum) Turkish lira is selling at? 12-) Assume the current U.S. dollar-yen spot rate is 100 Y/$. Further, the current nominal 180-day rate of return in Japan is 1% and 3% in the United States. What is the approximate forward exchange rate for 180 days?

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