Lions 1. An American firm sells farm equipment to a British company for 250,000 to be paid in 20 de The current exchange rate is $1.98/.. The exporter hedges its exchange rate risk by selling 12.000 forward 180 days at the prevailing 180-day forward exchange rate of $2.01/. What is the dolu amount the American firm is expected to receive in 180 days? 2. Suppose that at the beginning of 2015, the exchange rate between the Australian dollar (AD) and the U.S. dollar (USD) was 2.2 AD per USD. Over the year, Australia's inflation was 12% and the US. inflation was 4%. If purchasing power parity holds, at the end of 2015, what should be the approximate exchange rate of USDs per AD. 1 A III E B I Ins' tutions A 10-year semiannual payment bond with a par value of $1,000 has a 7%.coupon armulate Currently this bond is selling at par. Use the above information to answer the following questions. a. What is the duration of this par bond? b. If the Federal Reserve announces a QE and, therefore, interest rates unexpectedly tol. This bond's YTM drops by 100 basis points. What is the new duration? 1 A- B