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Given the following interest rates on different currencies, which of the following is true? Sterling 6 percent. Euro 3.5 percent. Dollar 6.25 percent. Yen 0.5 percent.

Correct Answer: The yen must be at a forward premium to the euro because one can borrow yen much more cheaply than euro.

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International Financial Management MCQ: Given the following interest rates on different currencies, which of the following is true? Sterling 6 percent. Euro 3.5 percent. Dollar 6.25 percent. Yen 0.5 percent. | Extra Education