Finance International

Finance International

Part 1)Calculate the real interest rate from the following 2 year government bond rates and forecast consumer prices to forecast the real interest rates for the following
Australian dollar
Japanese Yen
US Dollar
2yr bond rates Aus = 5.14%, Japan 0.80%, United States 3.76%
Forecast consumer Prices= Aus 2.7%, Japan -0.1%, United States 2.9%
Part 2) Using the real interest rates forecast in part 1, Forecast the following spot exchange rates one year in the future
Japanese yen/ US Dollar
Japanese Yen/ Australian Dollar
Australian Dollar/ US Dollar
The exchange rates provided are
2.37 Australian dollar/ 1 pound
197 Japanese Yen/ 1 Pound
1.76 US dollar/ 1 Pound

Finance International

Part 3 )Using the 3 month money market interest rates listed calculate the three month forward rates of the following exchange rates
Japanese yen/ US dollar
Japanese yen/ Australian dollar
Australian Dollar/ US Dollar
The interest rates are as follows
Australia= Latest 5.65%, Year ago 5.48%
Japan= Latest 0.20%, Year ago 0.20%
United States= latest 3.51%, year ago 1.49%
The exchange rates given are
2.37 Australian dollar/ 1 pound
197 Japanese Yen/ 1 Pound

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