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Uncovered interest rate parity equation

02/10/2021 Client: muhammad11 Deadline: 2 Day

Uncovered Interest Parity Explain the uncovered interest parity equation. (Write it and explain it). a. b. Why would we expect it to hold? l.e. what would happen if the equation does not hold? Assume the expected $/Yen exchange rate is 0.01 dollars per yen. Further assume that the US interest rate is 8% and the Japanese interest rate is 3%. According to uncovered interest parity, what would be the current S/Yen exchange rate? Show work. c.

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