Question: You noticed that there is a big return differential between Japan and Argentina: Japan one-year risk-free rate of return is 2%, whereas Argentinian risk free

You noticed that there is a big return differential between Japan and Argentina: Japan one-year risk-free rate of return is 2%, whereas Argentinian risk free rate is 35%. You observe the current spot rate the current exchange rate is 7.786 yen for 1 Argentine peso and annual inflation rate in Japan of 1%.

a) What is a 6-month forward rate in yen per peso?

b) What is the annual inflation in Argentina?

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