The Current Spot Rate Between Australian Dollars and Canadian Dollars

question 140

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
Approximate two-year forward rate if interest rate parity holds?

• A) A$0.968 per $1
• B) A$1.004 per $1
• C) A$1.119 per $1
• D) A$1.136 per $1
• E) A$1.342 per $1

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Definitions:

Time Sensitive

This term describes situations, operations, or processes that are highly dependent on the duration or timing in which they occur, necessitating prompt or precise scheduling.

Inventory Upstream

Refers to the inventory held by suppliers and manufacturers before it is distributed down the supply chain to the end consumer.

Safety Inventory

Extra inventory held to protect against stockouts caused by variability in demand or supply.

Supply Chain

The network of manufacturers, suppliers, and logistics providers that work together to produce and deliver products to consumers.