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3. Assume the following information: Current spot rate of Australian dollar = $.72 Forecasted spot rate of Australian dollar 1 year from now = $.75
3. Assume the following information: Current spot rate of Australian dollar = $.72
Forecasted spot rate of Australian dollar 1 year from now = $.75
1-year forward rate of Australian dollar = $.74
Annual interest rate for Australian dollar deposit = 3%
Annual interest rate in the U.S. = 1%
What is your percentage return from covered interest arbitrage with $100,000 for one year?
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