Amy has some Australian and Bangladeshi assets and liabilities as follows:

• AUD 900,000 Australian house asset.
• AUD 550,000 mortgage loan liability.
• AUD 25,000 owing on her credit card.
• BDT 35,000,000 Bangladeshi apartment asset thats owned outright with no mortgage. Note the apartment is denominated in Bangladeshi Taka (BDT), not Australian Dollars (AUD).
• The current exchange rate is 82 BDT per USD.
• The current exchange rate is 0.74 USD per AUD.

ALL ANSWERS TO 6DP

A) What is Amys net wealth in AUD

B) What is the weight of the asset class real estate in Amys net wealth?

C) What is the weight of the asset class debt in Amys net wealth? Remember that all things that have characteristics of debt should be included in the asset class debt.

D) What new BDT per AUD exchange rate would cause Amys net wealth to be AUD800,000? Assume that the shares remain the same value in BDT.

E) The investor currently has her AUD 6,000 spare cash invested in 2% pa term deposits in an Australian bank in AUD.

She notices that Bangladeshi banks pay 3% pa term deposit rates on BDT.

Both Australian and Bangladeshi banks have floating exchange rates and no capital controls.

She is considering converting her AUD6,000 to BDT now, investing in BDT term deposits, and then converting the BDT back to AUD in one year.

Calculate the 1 year forward BDT per AUD cross rate assuming that the principal of cross-currency interest rate parity holds.