Using monthly YEN/AUD data, implement a carry strategy by going long the forward of the currency that is trading at a discount. a) Compute the average return, std deviation, min and max returns. Compute and plot cumulative returns over time to investing $1 in this strategy at the beginning of the time period. b) Instead of using the forward, compute the carry returns as borrowing 1 YEN to pay back in one month, converting to AUD at the current spot rate, investing in AUD for a month, and converting back to YEN at the next months spot rate and paying back the initial 1 YEN borrowed. Do you expect to see significant differences between using forward market to do the carry trade or implementing directly in using the money markets? Why? c) What leverage level could have wiped out the equity for this carry strategy?

Date	YEN/AUD Spot	YEN/AUD 1M Forward	AUD LIBOR 1M	YEN LIBOR 1M
1989-01-31	114.93	113.8912128	15.297%	4.313%
1989-02-28	101.52	100.5523728	16.375%	4.781%
1989-03-31	108.64	107.519942	16.984%	4.438%
1989-04-28	105.09	104.028021	16.859%	4.563%
1989-05-31	106.8	105.6819623	17.938%	5.188%
1989-06-30	108.79	107.6734035	17.875%	5.375%
1989-07-31	104.12	103.0300739	18.000%	5.250%
1989-08-31	110.44	109.3515861	17.625%	5.625%
1989-09-29	108.23	107.1330931	17.938%	5.594%
1989-10-31	111.58	110.5192416	17.891%	6.313%
1989-11-30	111.78	110.7603367	17.859%	6.750%
1989-12-29	113.61	112.6126024	17.375%	6.688%
1990-01-31	111.1	110.1869119	16.750%	6.750%
1990-02-28	112.73	111.9217023	15.969%	7.250%
1990-03-30	118.79	118.0141139	15.250%	7.313%
1990-04-30	119.58	118.8478524	14.750%	7.313%