Use the following spot, forward bid-ask, and interest rates for of AUD and USD,

in AUD/USD:

180-day forward swap rate in AUD/USD:

The annual interest rates of for AUD: 4%, 5%; for USD: 2%, 3%

Assume a year has 360 days, to answer:

1. Find the of these rates and use PPP to explain if:
   1. the is greater than expected
   2. an investor can make profit by investing or borrowing USD
2. Use the spreads in the , , and interest rates to justify if:
   1. an investor can make profit by investing or borrowing USD
   2. an investor can make profit by investing or borrowing AUD
   3. Which one should be the major reason for an investor can't earn a profit?
      1. liquidity is too low
      2. fees are too high
      3. cost of transaction is high
      4. currencies are fairly priced

Please show the working, thank you.

-spot 1.2010-16 221-223 lending/borrowing midrates 180 days r forward -spot -spot -spot 1.2010-16 221-223 lending/borrowing midrates 180 days r forward -spot -spot