2.The spot ER between the Chinese renminbi and the Japanese yen is that each renminbi buys 10 yen. If the interest rates are 2% in Japan and 6% in China, what is the forward ER? EXPLICATE.

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2. We have a 1 billion won payable in one year from now. How do we appropriately hedge ourselves against it?

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Problem #2:

Current spot rate is: 1 Remnimbi is equivalent to 10 yen.
Interest rate in Japan = 2%
Interest rate in China = 6%

Since the interest rate in China is higher than Japan, the Chinese Remnimbi would depreciate so...
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