Yen Bank Wishes to Invest in Yen Loans at a Rate

Multiple Choice

Yen Bank wishes to invest in Yen loans at a rate of 10 percent.The bank will fund the loans in the domestic CD market at a rate of 6.3 percent.This on-balance-sheet FX risk will be hedged in the spot market at a forward rate of $0.62/ $\times$ .The spot rate on yen is $0.60/ $\times$ .

What must be the spot exchange rate to eliminate the preference for the yen loans if the forward rate remains $0.62/ $\times$ ?

A) $0.6416/ $\times$ .
B) $0.5798/ $\times$ .
C) $0.6118/ $\times$ .
D) $0.5991/ $\times$ .