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4. (17) If Interest Rate Parity (IRP) holds, then hedging with forward contract should yield the same remult as a money market's hedge. True or

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4. (17) If Interest Rate Parity (IRP) holds, then hedging with forward contract should yield the same remult as a money market's hedge. True or false? Using the data provided below, explain your answer. Simply stating true" or "false" is not sufficient. Show all your calculations, I Data: . Account receivable in one year from now: AD780,000; AD stands for Australian dollar Today's spot exchange rate: S(AD/5) - US$0.7528 per AD Annual interest rate (represents both the borrowing and lending rate) . US = 2.5% Australia - 4.3% Assume IRP holds

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