Currently, the spot exchange rate is USD0.8500/AUD, and the one-year forward exchange rate is USD0.8100/AUD. One-year interest is 3.5% in the United States and 4.2% in Australia. Verify whether Interest Rate Parity holds at these exchange and interest rates and how one might take advantage it it does not. For all exchange rates use 4 decimal places. For all AUD or USD values round to the nearest dollar (no decimal places). Use commas to separate your currency values. Be sure to indicate the appropriate currency by using the SWIFT currency codes. You may borrow up to USD1,000,000 or its spot equivalent of AUD 1,176,471 - at the current spot rate. In one year, today's USD0.8500 will be equivalent to USD and today's AUD1 will be worth AUD In this case, Interest Rate Parity (IRP) is not holding between Australia and the United States because the implied forward exchange rate using the interest rate differences is compared to the market forward rate of .8100 - Since IRP is not holding, you could realize a certain gain in U.S. dollar terms by borrowing AUD1,176,471 knowing that you need to repay AUD1,225,883 - in one year. To cover or fix the amount of this future repayment, immediately buy forward AUD1,225,883 - for at the prevailing forward rate. At the same time as you cover your loan obligation, take the proceeds of the loan and sell spot for Take this amount and invest to receive USD1,035,000 - at maturity in one year. At maturity in one year, the difference between what you will receive on your deposit and what need to pay to cover your loan is a difference of