Because it is unlikely she will be able to visit you this year, your wealthy American aunt wants to send you a present for your birthday. You expect she will give you USD 9420 in 3 months.

Having taken this course, you know you can lock in the AUD rate for this USD receivable using a money market hedge.

(Annualized) 3-month interest rates in the US are 6.2%-6%, and 3-month interest rates in Australia are 2%-1.8%.

The current bid-ask spot rates are 1.235-90 AUD/USD.

What is the locked in AUD value of this present?

a.

12136.5318

b.

7711.0573

c.

11507.6826

d.

11761.0974

e.

11755.3066