The 6 Month Interest Rate in Australia Is 0

question 46

Multiple Choice

The 6 month interest rate in Australia is 0.6%. 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 the U.S. is

• A) 6.00%.
• B) 3.02%.
• C) 3.42%.
• D) 2.00%.

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Definitions:

Payment

The transfer of money or goods from one party to another in exchange for goods, services, or to fulfill a contractual obligation.

Discount

denotes a reduction in the price of goods or services typically offered for promotional reasons or to certain groups of customers.

Supplier

An individual or company that provides goods or services to another entity under terms specified in a contract.

Net Present Value

A financial metric used to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.