Question: . Consider the data given below. The one-year rates can be viewed as spot interest rates, and the two-year rates are yields to maturity in

. Consider the data given below. The one-year rates can be viewed as spot interest rates, and the two-year rates are yields to maturity in annualized percent

. . Consider the data given below. The one-year rates can be viewed

The spot exchange rate is 130.15/.

What should be the two-year forward rate to prevent arbitrage?

two-year one-year U.K. 1.870 1.205 Japan 0.435 0.375

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