Business, 08.04.2020 01:22 vladutraileanu7599

Currently, the spot exchange rate is $0.85/A$ and the one-year forward exchange rate is $0.81/A$. One-year interest is 3.5% in the United States and 4.2% in Australia. You may borrow up to $1,000,000 or A$1,176,471, which is equivalent to $1,000,000 at the current spot rate. a. Determine if IRP is holding between Australia and the United States. b. If IRP is not holding, explain in detail how you would realize certain profit in U. S. dollar terms.

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Currently, the spot exchange rate is $0.85/A$ and the one-year forward exchange rate is $0.81/A$. On...