Question 4 (total of 10 marks): An investor has some Australian and Indian assets and liabilities as follows: AUD 600,000 apartment which is partly financed with a loan. AUD 500,000 mortgage loan. AUD 5,000 in her deposit account at the bank. INR 1,470,000 in Indian shares. Note the shares are denominated in Indian Rupee (INR), not Australian Dollars (AUD). The current exchange rate is 0.7 USD = 1 AUD. The current exchange rate is 70 INR = 1 USD. Note that this exchange rate is not per AUD. It's in INR per USD. Give your answer as a decimal correct to at least 6 decimal places. So for example if your answer is 1.23456789%, write 0.0123456789. If your answer is 400,000, write 400000. Do not use percentages and do not write units (m or k) after the number. Question 4ei (2 marks): The investor currently has her AUD 5,000 spare cash invested in 1% pa term deposits in an Australian bank in AUD. She notices that Indian banks pay 6% pa term deposit rates on INR. Both Australia and India have floating exchange rates and no capital controls. Stella is considering converting her AUD5,000 to INR now, investing in INR term deposits, and then converting the INR back to AUD in one year. Calculate the 1 year forward INR per AUD cross rate assuming that the principal of cross- currency interest rate parity holds. Answers: INR per AUD Question 4eii (2 marks): What's the NPV of converting the AUD5,000 into INR, investing it at an Indian bank's term deposit rate and converting back to AUD in one year? Again, assume that cross currency interest rate parity holds. Give your answer in AUD, rounded to at least 6 decimal places. Answers: AUD