Assume the Following Information

question 42

Multiple Choice

Assume the following information:
Current spot rate of Australian dollar = $.64
Forecasted spot rate of Australian dollar 1 year from now = $.59
1-year forward rate of Australian dollar = $.62
Annual interest rate for Australian dollar deposit = 9%
Annual interest rate in the U.S.= 6%
Given the information in this question,the return from covered interest arbitrage by U.S.investors with $500,000 to invest is _______%.

• A) about 6.00
• B) about 9.00
• C) about 7.33
• D) about 8.14
• E) about 5.59

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Definitions:

Paleolithic Cave

Prehistoric caves inhabited or used by early humans, notable for containing some of the earliest known cave paintings and artifacts.

Creation Myth

A symbolic narrative of how the world and its inhabitants came to be, varying widely across cultures, religions, and societies.

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The act of continuing to live or exist, especially in spite of challenging conditions or circumstances.

Göbekli Tepe

Göbekli Tepe is an archaeological site in southeastern Turkey, dating back to the 10th millennium BCE, renowned for its monumental circular and rectangular megalithic structures.