Practice Test: Economics - 3

Question 1

An analyst observes that inflation in Brazil is 8% and in the United States is 2%. The current BRL/USD spot rate is 5.00 (BRL per USD).

Using relative purchasing power parity (PPP), the expected BRL/USD spot rate in one year is closest to:

Accepted Answer

5.30

Answer

4.72

Answer

5.10

Question 2

Which of the following best distinguishes absolute purchasing power parity (PPP) from relative PPP?

Accepted Answer

Absolute PPP relates exchange rate levels to ratios of national price levels; relative PPP relates exchange rate changes to inflation rate differentials.

Answer

Absolute PPP uses nominal interest rate differentials; relative PPP uses inflation differentials to predict exchange rate changes.

Answer

Absolute PPP applies only in the short run due to sticky prices; relative PPP applies only in the long run when prices fully adjust.

Question 3

The EUR/USD spot rate is 1.1000 (USD per EUR). The 1-year USD interest rate is 4.00% and the 1-year EUR interest rate is 1.00%. An analyst computes the 1-year EUR/USD forward rate implied by covered interest rate parity (CIP).

The 1-year forward rate is closest to:

Accepted Answer

1.1327

Answer

1.1000

Answer

1.1033

Question 4

Which of the following best describes the key difference between covered interest rate parity (CIP) and uncovered interest rate parity (UIP)?

Accepted Answer

CIP relies on the forward exchange rate to eliminate arbitrage opportunities and holds reliably in practice; UIP relies on the expected future spot rate and holds only on average in theory.

Answer

CIP holds only in the long run as forward markets are illiquid; UIP is enforced by short-run arbitrage in spot currency markets.

Answer

CIP applies to equity capital flows across borders; UIP applies specifically to bond market interest rate differentials and yield curve slopes.

Question 5

The current GBP/USD spot rate is 1.2500 and the 1-year GBP/USD forward rate is 1.2200. A portfolio manager asserts that the forward rate is an unbiased predictor of the future spot rate.

If the manager's assertion is correct, which of the following is most consistent with her view?

Accepted Answer

The expected GBP/USD spot rate in one year is 1.2200, implying that the GBP is expected to depreciate against the USD.

Answer

The expected GBP/USD spot rate in one year is 1.2500, reflecting that the current spot rate is the best predictor of future rates.

Answer

The forward rate provides a risk premium over the expected future spot rate but does not serve as a forecast of the future spot rate.

Question 6

An economist compiles the following annual balance of payments data for Country X (in USD billions):

Merchandise trade deficit: −80
Services surplus: +30
Primary income surplus: +10
Secondary income deficit: −5
Net foreign direct investment inflows: +60
Net portfolio investment inflows: +20
Official reserve changes: −5

Country X's current account balance is closest to:

Accepted Answer

-$45 billion

Answer

-$80 billion

Answer

+$35 billion

Question 7

A foreign company acquires a controlling equity stake in a domestic manufacturing firm. In the balance of payments framework, this cross-border transaction is most appropriately recorded in:

Accepted Answer

The financial account, under foreign direct investment.

Answer

The current account, under primary income receipts from cross-border equity ownership.

Answer

The capital account, under acquisition of non-produced, non-financial assets.

Question 8

Country Y operates under a freely floating exchange rate regime. The government enacts a large fiscal stimulus program through deficit spending while the central bank maintains an unchanged monetary policy stance.

According to the Mundell-Fleming model, the most likely outcome is:

Accepted Answer

The domestic currency appreciates, crowding out net exports and largely offsetting the expansionary effect of the fiscal stimulus on real output.

Answer

Real output increases substantially and durably because the fiscal multiplier operates without any monetary policy offset under a floating exchange rate.

Answer

The domestic currency depreciates in response to increased government borrowing, amplifying net exports and magnifying the fiscal multiplier.

Question 9

Country Z maintains a fixed exchange rate peg. To stimulate economic growth, the central bank expands the money supply by purchasing government securities in the open market.

According to the Mundell-Fleming model, the most likely outcome is:

Accepted Answer

The money supply expansion is self-defeating, as the central bank must sell foreign reserves to defend the peg, reversing the initial monetary stimulus.

Answer

Real output rises significantly because the fixed exchange rate stabilizes expectations and amplifies the monetary policy transmission mechanism.

Answer

The fiscal multiplier is enhanced because the exchange rate cannot appreciate to crowd out net exports under the fixed exchange rate regime.

Question 10

In the Solow neoclassical growth model, long-run per-capita output growth is best explained by:

Accepted Answer

Exogenous technological progress (total factor productivity growth), because capital accumulation alone faces diminishing returns and cannot sustain long-run per-capita growth.

Answer

Ongoing increases in the national savings rate, which raise capital per worker and sustain per-capita output growth indefinitely above the steady-state rate.

Answer

Government fiscal spending on infrastructure, which permanently raises the steady-state per-capita growth rate by increasing aggregate demand.

Question 11

Two economists debate growth outcomes for Country A (low income, low savings rate) and Country B (high income, high savings rate). Both countries share identical total factor productivity (TFP) growth rates. Economist 1 predicts absolute per-capita income convergence between the two countries. Economist 2 disagrees, arguing that different savings rates imply different steady states and therefore absolute convergence is not guaranteed.

Based on the Solow neoclassical model, which economist's view is better supported?

Accepted Answer

Economist 2, because different savings rates imply different steady-state income levels in the Solow model, so absolute per-capita income convergence is not guaranteed.

Answer

Economist 1, because identical TFP growth rates guarantee absolute income convergence regardless of differences in savings rates or initial income levels.

Answer

Economist 1, because per-capita growth in the Solow model is determined solely by savings rates, which will equalize over time through international capital flows.

Question 12

Which of the following most accurately describes a key implication that distinguishes endogenous growth theory from the Solow neoclassical model?

Accepted Answer

Endogenous growth theory implies that policies promoting research and development and human capital accumulation can permanently raise the long-run per-capita growth rate, unlike the Solow model where such effects are transitory.

Answer

In endogenous growth theory, the long-run growth rate is exogenously determined by TFP, making government policy interventions ineffective in altering the steady-state growth rate.

Answer

Both models predict identical steady-state growth rates but differ only in the speed at which economies transition from current income levels to their respective steady states.

Question 13

An economist applies growth accounting to Country M using the following data:

Output growth: 5.0%
Capital growth: 4.0%
Labor growth: 2.0%
Capital share (α): 0.40
Labor share: 0.60

The total factor productivity (TFP) growth rate for Country M is closest to:

Accepted Answer

2.2%

Answer

1.6%

Answer

2.8%

Question 14

A senior regulator at a national energy commission consistently approves rate increase requests submitted by the dominant utility company without conducting independent analysis. Multiple former senior regulators have accepted executive or board positions at the regulated firm immediately following their regulatory tenure.

This situation is best described as an example of:

Accepted Answer

Regulatory capture, whereby the regulated industry effectively controls the regulatory process to serve its own commercial interests rather than the public interest.

Answer

A natural monopoly outcome arising from economies of scale that make multiple competing firms in the utility sector economically inefficient.

Answer

Countercyclical regulation, designed to stabilize the utility industry by approving rate increases during periods of economic contraction.

Question 15

An analyst examines an industry with five firms having the following market shares: 40%, 30%, 15%, 10%, and 5%.

The Herfindahl-Hirschman Index (HHI) for this industry is closest to:

Accepted Answer

2,850

Answer

1,850

Answer

3,250

Question 16

A coal-fired power plant is operating at 40% of its designed capacity following the enactment of government regulations mandating a transition to renewable energy sources. An appraiser notes the plant's physical and mechanical condition is excellent, but its earnings capacity has declined significantly due to the new regulatory environment.

The primary cause of the decline in the plant's value is best described as:

Accepted Answer

Economic obsolescence caused by external regulatory factors beyond the owner's control that have permanently impaired the asset's income-generating capacity.

Answer

Functional obsolescence arising from an inherent inefficiency in the plant's original design, layout, or engineering specifications.

Answer

Physical depreciation due to wear and tear progressively reducing the plant's mechanical efficiency and productive output.

Question 17

Country A has an annual inflation rate of 6% and a 1-year nominal interest rate of 8%. Country B has an annual inflation rate of 2% and a 1-year nominal interest rate of 4%. The current spot exchange rate is 2.00 (units of Country A's currency per unit of Country B's currency).

Using relative purchasing power parity and the international Fisher effect together, the expected spot rate in one year is closest to:

Accepted Answer

2.08

Answer

1.92

Answer

2.04

Question 18

A developed-country government formally cancels bilateral debt owed by a lower-income country under an international debt relief agreement. In the balance of payments framework, this transaction is most appropriately recorded in:

Accepted Answer

The capital account, under capital transfers, as debt forgiveness represents a transfer of a financial asset's value without quid pro quo.

Answer

The current account, under secondary income, as a unilateral current transfer between governments.

Answer

The financial account, under other investment liabilities, as the reduction in debt alters the creditor country's external claims.

Question 19

A government increases subsidies for university-based research and enacts stronger intellectual property protections for domestic innovators. An economist argues these policies will permanently raise the country's long-run per-capita growth rate above its historical trend.

The economist's argument is most consistent with which growth framework?

Accepted Answer

Endogenous growth theory, because knowledge accumulation and R&D generate non-diminishing returns to broad capital, allowing policy to permanently raise the long-run growth rate.

Answer

The Solow neoclassical growth model, because increases in the savings rate driven by R&D investment permanently raise the long-run steady-state per-capita growth rate.

Answer

The Solow model with human capital extensions, because depreciation adjustments to human capital accumulation increase capital per worker and raise the steady-state growth rate permanently.

Question 20

An FX analyst documents that currencies with higher interest rates have historically tended to appreciate, rather than depreciate as predicted by uncovered interest rate parity (UIP). The analyst uses this historical pattern to construct a currency carry trade strategy that borrows in low-interest-rate currencies and invests in high-interest-rate currencies.

The analyst's empirical observation is best described as:

Accepted Answer

Evidence of the forward rate bias, indicating that UIP does not hold reliably in practice and that the forward rate is a biased predictor of the future spot rate.

Answer

Consistent with uncovered interest rate parity, because higher interest rates attract capital inflows that cause appreciation in the short run.

Answer

A violation of covered interest rate parity, indicating persistent arbitrage opportunities in the forward foreign exchange market.

Question 21

Country P has recorded a persistent current account deficit averaging 6% of GDP for five consecutive years. The deficit has been financed by large financial account inflows. An analyst projects that the financial account inflows will reverse and the current account deficit will narrow through market adjustment.

If the analyst's projection is correct, the most likely impact on the earnings of a domestic import-intensive manufacturer is:

Accepted Answer

Earnings decline because currency depreciation raises the domestic-currency cost of imported inputs for the manufacturer.

Answer

Earnings improve because currency depreciation reduces the real value of the manufacturer's outstanding domestic-currency denominated debt.

Answer

Earnings are unaffected because the current account deficit narrowing offsets the currency depreciation effect on import costs.

Question 22

An industry has a Herfindahl-Hirschman Index (HHI) of 2,700. According to standard regulatory concentration guidelines, this industry is best characterized as:

Accepted Answer

Highly concentrated, indicating significant market power among existing incumbents and potential barriers to new competition.

Answer

Unconcentrated, consistent with a broadly competitive market structure and minimal barriers to entry.

Answer

Moderately concentrated, warranting a closer review before approving any proposed merger but not presumptively anticompetitive.

Question 23

A US-based equity analyst covers a large technology company that generates 70% of its revenues in foreign currencies (primarily EUR and JPY). The US Federal Reserve signals a sustained period of elevated interest rates relative to major foreign central banks.

Based on interest rate parity and its likely effect on the USD, the analyst should most likely expect:

Accepted Answer

USD appreciation, which reduces the USD value of the company's foreign-currency revenues and creates a negative earnings translation effect.

Answer

USD appreciation, which benefits the exporter by increasing the USD equivalent value of its foreign-currency denominated revenues and boosting reported earnings.

Answer

USD depreciation, driven by capital outflows seeking higher returns abroad in response to the elevated US interest rate environment.

Question 24

A researcher finds that relative purchasing power parity (PPP) has poor predictive power for exchange rate movements over a 1-month horizon but is a reasonably reliable benchmark over a 10-year horizon.

This finding is most consistent with which of the following statements about PPP?

Accepted Answer

PPP is more useful as a long-run equilibrium benchmark than as a short-run exchange rate predictor, as short-run rates are heavily influenced by capital flows and monetary policy.

Answer

PPP is primarily a short-run theory that loses empirical relevance when applied to longer-term economic data where structural changes dominate.

Answer

The finding contradicts PPP theory, which assumes equal predictive accuracy across all time horizons due to continuous goods market arbitrage.

Question 25

Country N raises its national savings rate from 20% to 30%. Economist 1 projects that this will permanently raise Country N's per-capita GDP growth rate above its historical long-run level. Economist 2 disagrees, contending that the higher savings rate will only generate transitional growth while Country N moves to a new, higher steady-state income level, after which the per-capita growth rate returns to its prior level.

According to the Solow neoclassical growth model, which economist's projection is correct?

Accepted Answer

Economist 2, because in the Solow model a higher savings rate raises the steady-state level of per-capita income but does not permanently increase the long-run per-capita growth rate.

Answer

Economist 1, because in the Solow model a higher savings rate permanently raises both the steady-state capital stock and the long-run per-capita output growth rate above its prior level.

Answer

Both economists, because the higher savings rate affects both the transitional growth path and the long-run TFP growth rate equally in the Solow framework.

Question 26

An analyst observes that the 1-year forward exchange rate between two currencies deviates from the level implied by covered interest rate parity (CIP). Which of the following best explains why this deviation is unlikely to persist in liquid markets?

Accepted Answer

Covered interest arbitrage eliminates the deviation by enabling risk-free profits through simultaneous spot borrowing, foreign-currency investment, and forward rate locking until parity is restored.

Answer

Uncovered interest rate parity enforces the forward rate back toward the expected future spot rate through speculative flows in the currency futures market.

Answer

The deviation persists indefinitely in practice because forward markets are too illiquid to incorporate interest rate differentials efficiently across currency pairs.

Question 27

Country F maintains a freely floating exchange rate and has recorded a persistent current account deficit. Its central bank implements a significant monetary easing, reducing the benchmark interest rate by 150 basis points, while fiscal policy remains unchanged.

According to the Mundell-Fleming model, the most likely sequence of events is:

Accepted Answer

Lower interest rates reduce net capital inflows, the domestic currency depreciates, net exports improve as the country becomes more competitive, and real output increases.

Answer

Lower interest rates attract additional foreign capital inflows, causing currency appreciation, widening the current account deficit, and reducing real output through the trade channel.

Answer

The monetary easing is fully offset by automatic fiscal contraction, leaving both the exchange rate and real output unchanged in the Mundell-Fleming framework.

Question 28

The current JPY/USD spot rate is 150.00 (JPY per USD). The 1-year JPY interest rate is 0.5% and the 1-year USD interest rate is 5.0%.

Using covered interest rate parity (CIP), the 1-year JPY/USD forward rate is closest to:

Accepted Answer

143.57

Answer

156.43

Answer

150.00

Question 29

An equity analyst notes that a telecommunications duopoly has maintained well-above-average return on equity (ROE) for a decade despite formal regulatory oversight. The analyst documents that former senior regulatory officials routinely accept board seats and executive roles at the regulated firms shortly after leaving office, and that rate increase requests are approved with minimal regulatory scrutiny.

The persistent above-average ROE is most likely attributable to:

Accepted Answer

Regulatory capture combined with high industry concentration, allowing incumbent firms to sustain pricing power and economic rents above competitive equilibrium levels.

Answer

Superior management quality and operational efficiency unique to each firm in the duopoly, generating genuinely competitive advantages that sustain above-average returns.

Answer

Endogenous technological innovation through learning-by-doing that continuously raises barriers to entry and generates persistent economic rents for incumbents.

Question 30

Country G experiences a sustained increase in total factor productivity (TFP) growth driven by broad technological adoption across its major industries. A portfolio manager is assessing the combined impact on Country G's domestic equity market valuations and its currency.

A sustained increase in TFP growth is most likely to have which of the following combined effects on Country G?

Accepted Answer

Higher equity valuations driven by stronger earnings growth, likely accompanied by real currency appreciation as higher productivity attracts capital inflows seeking superior risk-adjusted returns.

Answer

Higher equity valuations driven by earnings growth but accompanied by persistent currency depreciation, as rising wages from productivity growth erode export competitiveness.

Answer

Lower equity valuations, as rising productivity reduces unit labor costs and narrows corporate profit margins in traded goods sectors.

Economics - 3 - Free MCQ Practice Test with solutions, CFA Level 2

MCQ Practice Test & Solutions: Practice Test: Economics - 3 (30 Questions)

An analyst observes that inflation in Brazil is 8% and in the United States is 2%. The current BRL/USD spot rate is 5.00 (BRL per USD).
Using relative purchasing power parity (PPP), the expected BRL/USD spot rate in one year is closest to:

Which of the following best distinguishes absolute purchasing power parity (PPP) from relative PPP?

The EUR/USD spot rate is 1.1000 (USD per EUR). The 1-year USD interest rate is 4.00% and the 1-year EUR interest rate is 1.00%. An analyst computes the 1-year EUR/USD forward rate implied by covered interest rate parity (CIP).
The 1-year forward rate is closest to:

Which of the following best describes the key difference between covered interest rate parity (CIP) and uncovered interest rate parity (UIP)?

The current GBP/USD spot rate is 1.2500 and the 1-year GBP/USD forward rate is 1.2200. A portfolio manager asserts that the forward rate is an unbiased predictor of the future spot rate.
If the manager's assertion is correct, which of the following is most consistent with her view?

A foreign company acquires a controlling equity stake in a domestic manufacturing firm. In the balance of payments framework, this cross-border transaction is most appropriately recorded in:

Country Y operates under a freely floating exchange rate regime. The government enacts a large fiscal stimulus program through deficit spending while the central bank maintains an unchanged monetary policy stance.
According to the Mundell-Fleming model, the most likely outcome is:

Country Z maintains a fixed exchange rate peg. To stimulate economic growth, the central bank expands the money supply by purchasing government securities in the open market.
According to the Mundell-Fleming model, the most likely outcome is:

In the Solow neoclassical growth model, long-run per-capita output growth is best explained by:

Which of the following most accurately describes a key implication that distinguishes endogenous growth theory from the Solow neoclassical model?

An economist applies growth accounting to Country M using the following data:
Output growth: 5.0%
Capital growth: 4.0%
Labor growth: 2.0%
Capital share (α): 0.40
Labor share: 0.60
The total factor productivity (TFP) growth rate for Country M is closest to:

An analyst examines an industry with five firms having the following market shares: 40%, 30%, 15%, 10%, and 5%.
The Herfindahl-Hirschman Index (HHI) for this industry is closest to:

A developed-country government formally cancels bilateral debt owed by a lower-income country under an international debt relief agreement. In the balance of payments framework, this transaction is most appropriately recorded in:

An industry has a Herfindahl-Hirschman Index (HHI) of 2,700. According to standard regulatory concentration guidelines, this industry is best characterized as:

A researcher finds that relative purchasing power parity (PPP) has poor predictive power for exchange rate movements over a 1-month horizon but is a reasonably reliable benchmark over a 10-year horizon.
This finding is most consistent with which of the following statements about PPP?

An analyst observes that the 1-year forward exchange rate between two currencies deviates from the level implied by covered interest rate parity (CIP). Which of the following best explains why this deviation is unlikely to persist in liquid markets?

The current JPY/USD spot rate is 150.00 (JPY per USD). The 1-year JPY interest rate is 0.5% and the 1-year USD interest rate is 5.0%.
Using covered interest rate parity (CIP), the 1-year JPY/USD forward rate is closest to:

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Economics - 3 - Free MCQ Practice Test with solutions, CFA Level 2

MCQ Practice Test & Solutions: Practice Test: Economics - 3 (30 Questions)

An analyst observes that inflation in Brazil is 8% and in the United States is 2%. The current BRL/USD spot rate is 5.00 (BRL per USD).Using relative purchasing power parity (PPP), the expected BRL/USD spot rate in one year is closest to:

Which of the following best distinguishes absolute purchasing power parity (PPP) from relative PPP?

The EUR/USD spot rate is 1.1000 (USD per EUR). The 1-year USD interest rate is 4.00% and the 1-year EUR interest rate is 1.00%. An analyst computes the 1-year EUR/USD forward rate implied by covered interest rate parity (CIP).The 1-year forward rate is closest to:

Which of the following best describes the key difference between covered interest rate parity (CIP) and uncovered interest rate parity (UIP)?

The current GBP/USD spot rate is 1.2500 and the 1-year GBP/USD forward rate is 1.2200. A portfolio manager asserts that the forward rate is an unbiased predictor of the future spot rate.If the manager's assertion is correct, which of the following is most consistent with her view?

A foreign company acquires a controlling equity stake in a domestic manufacturing firm. In the balance of payments framework, this cross-border transaction is most appropriately recorded in:

Country Y operates under a freely floating exchange rate regime. The government enacts a large fiscal stimulus program through deficit spending while the central bank maintains an unchanged monetary policy stance.According to the Mundell-Fleming model, the most likely outcome is:

Country Z maintains a fixed exchange rate peg. To stimulate economic growth, the central bank expands the money supply by purchasing government securities in the open market.According to the Mundell-Fleming model, the most likely outcome is:

In the Solow neoclassical growth model, long-run per-capita output growth is best explained by:

Which of the following most accurately describes a key implication that distinguishes endogenous growth theory from the Solow neoclassical model?

An economist applies growth accounting to Country M using the following data:Output growth: 5.0%Capital growth: 4.0%Labor growth: 2.0%Capital share (α): 0.40Labor share: 0.60The total factor productivity (TFP) growth rate for Country M is closest to:

An analyst examines an industry with five firms having the following market shares: 40%, 30%, 15%, 10%, and 5%.The Herfindahl-Hirschman Index (HHI) for this industry is closest to:

A developed-country government formally cancels bilateral debt owed by a lower-income country under an international debt relief agreement. In the balance of payments framework, this transaction is most appropriately recorded in:

An industry has a Herfindahl-Hirschman Index (HHI) of 2,700. According to standard regulatory concentration guidelines, this industry is best characterized as:

A researcher finds that relative purchasing power parity (PPP) has poor predictive power for exchange rate movements over a 1-month horizon but is a reasonably reliable benchmark over a 10-year horizon.This finding is most consistent with which of the following statements about PPP?

An analyst observes that the 1-year forward exchange rate between two currencies deviates from the level implied by covered interest rate parity (CIP). Which of the following best explains why this deviation is unlikely to persist in liquid markets?

The current JPY/USD spot rate is 150.00 (JPY per USD). The 1-year JPY interest rate is 0.5% and the 1-year USD interest rate is 5.0%.Using covered interest rate parity (CIP), the 1-year JPY/USD forward rate is closest to:

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An analyst observes that inflation in Brazil is 8% and in the United States is 2%. The current BRL/USD spot rate is 5.00 (BRL per USD).
Using relative purchasing power parity (PPP), the expected BRL/USD spot rate in one year is closest to:

The EUR/USD spot rate is 1.1000 (USD per EUR). The 1-year USD interest rate is 4.00% and the 1-year EUR interest rate is 1.00%. An analyst computes the 1-year EUR/USD forward rate implied by covered interest rate parity (CIP).
The 1-year forward rate is closest to:

The current GBP/USD spot rate is 1.2500 and the 1-year GBP/USD forward rate is 1.2200. A portfolio manager asserts that the forward rate is an unbiased predictor of the future spot rate.
If the manager's assertion is correct, which of the following is most consistent with her view?

Country Y operates under a freely floating exchange rate regime. The government enacts a large fiscal stimulus program through deficit spending while the central bank maintains an unchanged monetary policy stance.
According to the Mundell-Fleming model, the most likely outcome is:

Country Z maintains a fixed exchange rate peg. To stimulate economic growth, the central bank expands the money supply by purchasing government securities in the open market.
According to the Mundell-Fleming model, the most likely outcome is:

An economist applies growth accounting to Country M using the following data:
Output growth: 5.0%
Capital growth: 4.0%
Labor growth: 2.0%
Capital share (α): 0.40
Labor share: 0.60
The total factor productivity (TFP) growth rate for Country M is closest to:

An analyst examines an industry with five firms having the following market shares: 40%, 30%, 15%, 10%, and 5%.
The Herfindahl-Hirschman Index (HHI) for this industry is closest to:

A researcher finds that relative purchasing power parity (PPP) has poor predictive power for exchange rate movements over a 1-month horizon but is a reasonably reliable benchmark over a 10-year horizon.
This finding is most consistent with which of the following statements about PPP?

The current JPY/USD spot rate is 150.00 (JPY per USD). The 1-year JPY interest rate is 0.5% and the 1-year USD interest rate is 5.0%.
Using covered interest rate parity (CIP), the 1-year JPY/USD forward rate is closest to: