Interest Rate Parity (invest here, or invest there) China investment rate for 1 year = 7% Japan

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Interest Rate Parity (invest here, or invest there)

China investment rate for 1 year = 7%

Japan investment rate for 1 year= 1%

Spot quote = 16.10 -11 CNYJPY (6 character coding, NOT fraction)

1 year forward quote = 15.40 - 42 CNYJPY

Use the data above to determine if covered interest arbitrage is possible.

Japan invests 100 Yen in China and brings it back to Japan. Solve for JPY

China invests 100 Yuan in Japan and brings it back to China. Solve for CNY

Related Book For answer-question

International financial management

ISBN: 978-0324593471

9th Edition

Authors: Jeff Madura

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Posted Date: Apr 28, 2023 09:02 AM

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Interest Rate Parity (invest here, or invest there) China investment rate for 1 year = 7% Japan

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a Covered interest arbitrage involves taking advantage of discrepancies between domestic and foreign ... View the full answer

International financial management

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