The Current Exchange Rates Between Australian Dollars and US Dollars

question 16

Multiple Choice

The current exchange rates between Australian dollars and US dollars is AUD 1 = USD 0.7500.Interest rates for one year are 5 per cent in Australia and 8 per cent in the US.What is the expected spot exchange rate?

• A)AUD 1 = USD 0.7700
• B)USD 1 = AUD 1.3000
• C)USD 1 = AUD 1.3700
• D)AUD 1 = USD 0.7700 and USD 1 = AUD 1.3000

---

Definitions:

Donee Beneficiary

A third party who benefits from a contract made between two other parties, particularly where the contract's intent is to gift something to the beneficiary.

Creditor Beneficiary

A third party that benefits from a contract in which one party promises to pay a debt owed to the third party by the other contract party.

Promisee

The party in a contract who is promised something by another party (the promisor) and stands to benefit from the fulfillment of that promise.

Novation

The act of replacing one obligation with another, which involves a new party or a new agreement and extinguishes the original contract.