Quantitative Problem:
a. In the spot market, 2.05 Brazilian real can be exchanged for 1 U.S. dollar. An Apple iPad Air costs $650 in the United States. If purchasing power parity (PPP) holds, what should be the price of the same iPad Air in Brazil? Round your answer to the nearest whole number. Do not round intermediate calculations.
=___ reals
b. Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.015, while in the 180-day forward market 1 Japanese yen = $0.0157. 180-day risk-free securities yield 1.7% in Japan. What is the yield on 180-day risk-free securities in the United States? Round your answer to 2 decimal places. Do not round intermediate calculations.
= ___ %
Quantitative Problem:
a. In the spot market, 2.05 Brazilian real can be exchanged for 1 U.S. dollar. An Apple iPad Air costs $650 in the United States. If purchasing power parity (PPP) holds, what should be the price of the same iPad Air in Brazil? Round your answer to the nearest whole number. Do not round intermediate calculations.
=___ reals
b. Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.015, while in the 180-day forward market 1 Japanese yen = $0.0157. 180-day risk-free securities yield 1.7% in Japan. What is the yield on 180-day risk-free securities in the United States? Round your answer to 2 decimal places. Do not round intermediate calculations.
= ___ %
Related questions
| Problem 17-12 Assume that interest rate parity holds and that 90-day risk-free securities yield 5% in the United States and 5.5% in Germany. In the spot market, 1 euro equals $1.34 dollar. Is the 90-day forward rate trading at a premium or discount relative to the spot rate?-Select-premiumdiscountItem 1 What is the 90-day forward rate? Round your answer to four decimal places. $ |
