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You are given that the annual Australian dollar interest rate is 3% and the United States dollar annual interest rate is 4.5%. The spot rate

You are given that the annual Australian dollar interest rate is 3% and the United States dollar annual interest rate is 4.5%. The spot rate for the United States dollar is $A1.60.

a. Using interest rate parity, calculate the forward rate premium of the United States dollar with respect to the Australian dollar

b. Using your answer to (a), calculate the one-year forward rate.

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