The Current Spot Rate Between Australian Dollars and Canadian Dollars

question 362

Multiple Choice

The current spot rate between Australian dollars and Canadian dollars is A$1.015 per $1. The rate on Canadian T-bills is 5% and the rate on an Australian risk-free security is 10%. What is the one-year
Forward rate if interest rate parity holds?

• A) A$0.9689 per $1
• B) A$1.0486 per $1
• C) A$1.0633 per $1
• D) A$1.0827 per $1
• E) A$1.1124 per $1

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