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Assume the following information: Quoted Price Spot rate of Australian dollar USD.855/AUD 180-day forward rate of Australian dollar USD.839/AUD 180-day Australian interest rate (a periodic

Assume the following information: Quoted Price

Spot rate of Australian dollar USD.855/AUD

180-day forward rate of Australian dollar USD.839/AUD

180-day Australian interest rate (a periodic rate) 3.0%

180-day U.S. interest rate (a periodic rate) 4.4%

A. What % ROR can a US investor earn if they attempt covered interest arbitrage?

B. What % ROR can an Australian investor earn if they attempt covered interest arbitrage?

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