INTEREST RATE PARITY. Assume that interest rate parity holds. In both the spot market and the 90-day forward market, 1 Japanese yen = 0.0086 dollar. And 90-day risk-free securities yield 4.6% in Japan. What is the yield on 90-day risk-free securities in the United States?

Evaluate the American bond yield curve below. Utilising an adequate theoretical lens, explain what the yield curve indicates about the direction of future interest rates, and what this could mean about future lending decisions

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 10 years to maturity, and a coupon rate of 8.7 percent paid annually. If the YTM is 10.7 percent, what is the current bond price in euros? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Current bond price

Suppose that the observed spread between the yield on a 2-year zero-coupon riskless bond and the yield on a 2-year zero-coupon bond issued by a corporation is 1.85%. By how much (as a percentage) would the Black- Scholes-Merton model overstate the value of a 2-year European option sold by the corporation?

Am. 397.

Assume that interest rate parity holds. In both the spot market and the 90-day forward market, 1 Japanese yen equals 0.0088 dollar. In Japan, 90-day risk-free securities yield 4.4%. What is the yield on 90-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.