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9.) Suppose the average interest rate on Australian government bonds is 1%, and the average interest rate on U.S. government bonds is 1.5%. If F
9.) Suppose the average interest rate on Australian government bonds is 1%, and the average interest rate on U.S. government bonds is 1.5%. If F and E are both 0.717 $/AUD, then the investor should choose: A) neither since bonds have high default rates. B) both since an investor will choose some Australian bonds and some U.S. bonds to diversify. C) the Australian bond because their economies are usually more stable. D) the dollar bond since there is an arbitrage opportunity. 10.) In Question 9, if the only rate to change is F, to what value will it be driven? Show why. 11.) In your answer to Question 10, is the Australian dollar now at a forward premium or a forward discount? Why
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