Use the information in the table below to answer the following questions: The si

Question

Use the information in the table below to answer the following questions: The six-month forward rate for the Japanese yen is a premium per U.S. dollar. The yen is selling at because it is | more expensive in the forward market than in the spot market (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) The three-month forward rate for the British pound is is selling at a discount per U.S. dollar. The British pound | in the forward market than in the spot market. (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) because it is less expensive Based on the information in the figure, the value of the U.S. dollar will | fall with respect to the British pound. with respect to the yen and will rise

Explanation / Answer

a) The three-month forward rate for the Yen is 107.50 Yen per U.S. Dollar. The Yen is selling at a discount because it is more expensive in the forward market than in the spot market.

b) The three-month forward rate for the British pound is GBP 0.6334 per U.S.Dollar. The GBP is selling at a premium because it is less expensive in the forward market than in the spot market.  

c) Based on the informaiton in the figure, teh value of U.S. Dollar will fall with respect to the Yen, and will rise wilh respect to the British Pound.

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