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[solution]: Please use the following information to answer question 15-16


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Please use the following information to answer question 15-16

Assumptions

Value Yen Equivalent
Arbitrage Funds available $1,000,000 88,000,000
Spot exchange rate (¥/$) 88.00  
Expected spot rate in 90 days (¥/$) 82.00  
U.S. dollar 3-month interest rate 4.800%  
Japanese yen 3-month interest rate 2.500%  

3-month interest rates are quoted in APR format.

What will be the gain or loss for this yen carry trade?

-¥5.166 M
-¥5.266 M
-¥5.366 M
-¥5.466 M
-¥5.566 M


Flag this QuestionQuestion 16

 If yen depreciated against USD to ¥ 91/$, what will be the gain or loss for this yen carry trade?

¥2.162 M
¥2.532 M
¥3.542 M
¥3.862 M
¥4.442 M


 


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