September 2023 If interest rate parity is satisfied and the interest rate in
September 2023 Business & Finance Assignment
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If interest rate parity is satisfied and the interest rate in the U. S. is greater than the interest rate in Japan we can conclude that:
the yen trades at a forward premium. 

the yen trades at a forward discount. 
The term “covered” in covered interest arbitrage indicates that:
the default risk is insured. 

there is no exchange rate risk exposur If the pound interest rate is 1% p.a., and the dollar interest rate is 5% p.a., what is the magnitude of the forward premium or discount for the pound? (positive for premium and negative for discount)
