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What is the usd cost of borrowing in jpy

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Reference no: EM13267519

Suppose that on January 1st the annual cost of borrowing in JPY and US dollars are 2% and 7% respectively (Rjpy=2% and RUS=7%). The spot rate of USD on January 1st is USD/JPY110 or 110 ¥ per $. One year forward rate was quoted as USD/JPY102 or 102. What is the USD cost of borrowing in JPY? Or what is the rate of borrowing in USD?

a -5.4%

b 2%

c 10%

d 7%

 

 

Reference no: EM13267519

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