The 6 Month Interest Rate in the U

question 50

Multiple Choice

The 6 month interest rate in the U.S. is 2%. The spot exchange rate for Australian dollars is 1.4063 to the U.S.dollar. The 6 months forward rate is 1.4259 to the U.S. dollar. These prices indicate that the 6 month risk-free rate in Australia is

• A) 6.00%.
• B) 0.34%.
• C) 0.60%.
• D) 3.42%.

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Definitions:

Self-serving Bias

A cognitive bias that involves perceiving oneself in a way that is overly favorable, such as attributing successes to personal attributes but failures to external factors.

Unintentional Action

An act performed without conscious thought or intention.

Due to Exhaustion

A state or condition caused by severe physical or mental fatigue, often resulting from extreme effort or stress.

Availability Heuristic

The tendency to judge the frequency or likelihood of an event by the ease with which relevant instances come to mind