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Assume that interest rate parity holds. Australian five-year interest rate is 5% annualised, and the Singaporean five-year interest rate is 8% annualised. Today's spot rate

Assume that interest rate parity holds. Australian five-year interest rate is 5% annualised, and the Singaporean five-year interest rate is 8% annualised. Today's spot rate of the Singapore dollar is A$1.04. What is the approximate five-year forecast of the Singapore dollar's spot rate if the five-year forward rate is used as a forecast?

a. A$1.0697. b. A$0.9830. c. A$0.0697. d. A$1.1405. e. A$0.9034.

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