Assume the Following Information: ​

question 33

Multiple Choice

Assume the following information: ​
Current spot rate of Australian dollar = £0.40
Forecasted spot rate of Australian dollar 1 year from now = £0.37
1-year forward rate of Australian dollar = £0.38
Annual interest rate for Australian dollar deposit = 9%
Annual interest rate in the UK = 6%
​
Given the information in this question, the return from covered interest arbitrage by UK investors is ______%.

• A) 3.00
• B) 4.15
• C) 2.33
• D) 1.14
• E) 3.55

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Definitions:

Training Transfer

Training Transfer is the successful application of skills, knowledge, or attitudes learned in a training setting to the job environment, enhancing job performance.

Internal Referencing Strategy

A method wherein individuals compare their current situation, achievements, or outcomes against their previous performances instead of comparing themselves to others.

Post-only Design

An experimental design where measurements are taken only after the intervention, lacking a baseline measurement for comparison.

Time Series Design

A research design that involves observations of a particular variable or variables over a set period, allowing for the analysis of trends or changes over time.