Assume That the U

question 37

Multiple Choice

Assume that the U.S. one-year interest rate is 3 percent and the one-year interest rate on Australian dollars is 6 percent. The U.S. expected annual inflation is 5 percent, while the Australian inflation is expected to be 7 percent. You have $100,000 to invest for one year and you believe that PPP holds. The spot exchange rate of an Australian dollar is $0.689. What will be the yield on your investment if you invest in the Australian market?

• A)6 percent
• B)3 percent
• C)4 percent
• D)2 percent

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Definitions:

Nordic Countries

A geographical and cultural region in Northern Europe and the North Atlantic, consisting of Denmark, Finland, Iceland, Norway, and Sweden, known for their strong welfare systems and high standard of living.

Job Satisfaction

The level of contentment employees feel regarding their jobs, which can influence their performance and retention.

Affective Commitment

The emotional attachment an employee feels towards their organization, influencing their desire to stay and contribute.

Long-term Employment

Employment that is intended to last for an extended period, often offering greater job security and benefits.