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Suppose that you are a trader in the United States (US) and you see the following quotes: Spot exchange rate : 0.6815 US dollar (USD)

Suppose that you are a trader in the United States (US) and you see the following quotes:

Spot exchange rate : 0.6815 US dollar (USD) per Australian dollar (AUD)

180 day forward rate : 0.6805 USD per AUD (USD/AUD)

180 day AUD interest rate: 2% per annum

180-day USD interest rate : 1% pa

Suppose that you have USD 800,000. Can you make a profit (in USD) with these quotes? Show your working clearly and completely.

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Answer i FIRSTLY WE CONVERT USD 800000 INTO AUD BY USING SPOT RATE ie 06815 per AU... blur-text-image

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