What is the rate of return on one year risk-free security

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The spot rate between Japan and the U.S. is 104.02 yen=$1 while the 1 year forward rate is 105.13 yen = $1. A 1-year risk free security in the U.S. is yielding 4.2%. What is the rate of return on a 1-year risk-free security in Japan assuming that interest rate parity exists?

A) 5.08%

B) 4.67%

C) 5.31%

D) 1.88%

E) 2.09%

Reference no: EM13940351

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