Consider the Following What Should Be the Proper Futures Price for a 1-Year

question 44

Multiple Choice

Consider the following: $\begin{array}{lc} &\text { CE Now } \\ \text { Risk-free rate in the United States } & \text { 0.04 / year } \\ \text { Risk-free rate in Australia } & \text { 0.03 / year} \\ \text { Spot exchange rate } &1.67A\$/\$\\\end{array}$
What should be the proper futures price for a 1-year contract?

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Definitions:

Heart

Muscular organ whose contraction causes blood to circulate in the body of an animal.

Elastic

The ability of an object or material to resume its normal shape after being stretched or compressed, a characteristic of materials like rubber.

Oxytocin

Hormone, released by the posterior pituitary, that causes contraction of the uterus and milk letdown.

Uterus

In mammals, expanded portion of the female reproductive tract through which eggs pass to the environment or in which an embryo develops and is nourished before birth.