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Spot rate: $0.85/A$ Forward(12-mos): $0.81/A$ Int. Rate (US): 3.5% Int. Rate (Australia): 4.2% 1). IRP forward rate is ______ the actual forward rate, indicating that
| Spot rate: $0.85/A$ | Forward(12-mos): $0.81/A$ |
| Int. Rate (US): 3.5% | Int. Rate (Australia): 4.2% |
1). IRP forward rate is ______ the actual forward rate, indicating that the ____ is overvalued in the forward market.
2). As astute traders conduct arbitrage, what will happen?
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Financial Markets Instruments And Institutions
Authors: Anthony M. Santomero, David Babbel
2nd Edition
0072358688, 9780072358681
