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Suppose that the 2-year interest rates with continuous compounding in Australia and the United States are 1.6% and 2.2% per annum, respectively, and the spot

Suppose that the 2-year interest rates with continuous compounding in Australia and the United States are 1.6% and 2.2% per annum, respectively, and the spot exchange rate between the Australian dollar (AUD) and the US dollar (USD) is currently quoted as 0.82 USD per AUD. Consider the domestic investor is in US and will trade with firms in Australia. The 2-year forward exchange rate on AUD is closest to: a. 0.83 b. 1.11 c. 0.63 d. 1.01

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