Why should I choose AnalystNotes?
Simply put: AnalystNotes offers the best value and the best product available to help you pass your exams.
Basic Question 4 of 4
The current spot rate between the Japanese yen and the U.S. dollar is ¥124.56/$. If the risk-free rate in Japan is 2.6% and in the U.S. it's 6.4%, what should be the 6-month forward rate?
B. ¥126.85/$
C. ¥122.31/$
A. ¥120.11/$
B. ¥126.85/$
C. ¥122.31/$
User Contributed Comments 4
| User | Comment |
|---|---|
| NIKKIZ | How should I know when to use 360 and when to use 365 days? |
| aqibislam | Interest rates for bonds are based on 360 days so for FRA use 360 days but for currencies and equities 365 days is used |
| ericczhang | ...if you look at the answer to the previous basic question, they used 365 days for a USDCAD problem. I guess the best bet is to get it approximately right? |
| jpowers | It says 6 months, which is half a year. When working with months, use the fraction of a year. In this case 6/12 or .5 years. |
I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
describe how fixed-income forwards and futures are priced, and calculate and interpret their no-arbitrage value;
CFA® 2025 Level II Curriculum, Volume 5, Module 31.