International parity conditions approach Covered vs uncovered interest arbitrage An investor observes the following data: --Spot rate between YEN and USD:S(YEN/USD)=118.611 --180 days forward rate between YEN and USD: F(YEN/USD)=117.800 --180 days US dollar interest rate (per annum): iUSD=4.8% --180 days Japanese yen interest rate(%per annum): iYEN 3.4%International parity conditions approach Covered vs uncovered interest arbitrage An investor observes the following data: --Spot rate between YEN and USD: S(YEN/USD) = 118.611 --180 days forward rate between YEN and USD: F(YEN/USD) = 117.800 --180 days US dollar interest rate (% per annum): iUSD = 4.8% --180 days Japanese yen interest rate (% per annum): iYEN = 3.4%