a. The 1-year interest rate in the US is 10% and the 1-year interest rate in Japan is 5%. Does this present a riskless way to raise capital at a low-interest rate?

b. The 1-year interest rate in the US is 10% and the 1-year interest rate in Japan is 5%. If the current spot exchange rate isJPY 140 /USD What is the lowest future exchange rate at which borrowing in JPY is cheaper than borrowing in USD?

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1 It can be seen that the interest rate in United States is higher than the i... View the full answer