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1. The Australian dollar is trading at 0.78 AUD per USD (the spot rate). If the expected U.S. inflation rate is 5% while the Australian

1. The Australian dollar is trading at 0.78 AUD per USD (the spot rate). If the expected U.S. inflation rate is 5% while the Australian inflation rate is 1% over the next year, what is the expected exchange rate in one year ( the forward rate)?

2. Explain clearly why certain news can possibly effect the stock price of a corporation?

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