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Periodic interest rate in the foreign country

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INTEREST RATE PARITY

The nominal yield on 6-month T-bills is 4%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 4.5%. In the spot exchange market, 1 yen equals $0.009. If interest rate parity holds, what is the 6-month forward exchange rate? Round the answer to five decimal places. Do not round intermediate calculations.

Forward rate/Spot rate = 1+rh (periodic interest rate in the home country 4% US/1+rf (periodic interest rate in the foreign country 4.5% Japan

Reference no: EM132538973

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