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Following data are extracted from the databased of the World Bank (https:K/dataworldbankorgf) Deposit interest rate Ofcial exchange rate Ofcial exchange rate (For the period of
Following data are extracted from the databased of the World Bank (https:K/dataworldbankorgf) Deposit interest rate Ofcial exchange rate Ofcial exchange rate (For the period of 2017) at 2017 (per 118$) at 2018 (per USES) Questions 3. Suppose that you can borrow Japanese Yen at the deposit interest rate. Suppose that you conduct a carry trade (i.e. borrow Yen, exchange Yen for Australian Dollar and deposit the dollar) at Year 2017. Explain whether you make a prot/suffer a loss with the actual exchange rate at 2018. (2 marks)
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