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QUESTION
Smart is small US businessman with $2 Million to invest for 1year. The interest rate in Japan is 1.03 percent and in the United States it is 6.03...
1.Smart is small US businessman with $2 Million to invest for 1year. The interest rate in Japan is 1.03 percent and in the United States it is 6.03 percent. Suppose Smart locks in the future value of yen by entering a forward contract for a year at the rate of ¥113.94/$. The current rate of exchange or spot rate is ¥119.58/$.
