Assume an FI Sells A$100 Million for US Dollars on the Spot

question 22

Multiple Choice

Assume an FI sells A$100 million for US dollars on the spot currency markets at an exchange rate of A$1.20 to US$1.00 and invests the US dollar assets at an interest rate of 12% for one year.What is the value of the US dollar assets at the end of the year (round to two decimals) ?

• A)US$134 400.00 million
• B)US$22 400.00 million
• C)US$93 333.33 million
• D)US$560 000.00 million

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