You Have the Opportunity to Invest in the United States

question 17

Multiple Choice

You have the opportunity to invest in the United States at 6% or invest in an equally risky Australian investment that offers 20%. This is too good to be true! The current exchange rate is A$1.65/$. Which one of the following do you suspect about this 1-year investment?

• A) Expected inflation is higher in the United States.
• B) The 1-year forward exchange rate is A$1.8679/$.
• C) Real interest rates are higher in the United States.
• D)The Australian dollar is selling forward at an 8.48% premium relative to the dollar.

---

Definitions:

Human Beings

Members of the species Homo sapiens, characterized by their capacity for complex language, abstract thought, and social structures.

Anthropocentrism

The belief that human beings are the most important entity in the universe, often leading to the interpretation of reality through a human-centric viewpoint.

Physical Environment

The surrounding physical conditions in which organisms live, including geography, climate, and man-made structures.

Carbon Dioxide Emissions

The release of CO2 into the atmosphere, primarily through human activities such as burning fossil fuels, which contributes to global warming and climate change.