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Business, 08.09.2020 14:01 gingerham1

Suppose that in 2023 one- and two-year interest rates are 5.7% in the United States and 1.2% in Japan. The spot exchange rate is 120.20/$. Suppose that one year later interest rates are 3% in both countries, while the value of the yen has appreciated to #114.87/$. a. Benjamin Pinkerton from New York invested in a U. S. two-year zero-coupon bond at the start of the period and sold it after one year. What was his return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Benjamin Pinkerton's return
b. Madame Butterfly from Osaka bought some dollars. She also invested in the two-year U. S. zero-coupon bond and sold it after one year. What was her return in yen? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Butterfly's return in yen
c. Suppose that Ms. Butterfly had correctly forecasted the price at which she sold her bond and that she hedged her investment against currency risk. What would have been her return in yen? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Butterfly's return in yen

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Suppose that in 2023 one- and two-year interest rates are 5.7% in the United States and 1.2% in Japa...
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