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You are hired by a financial company in New Zealand and you have instant access to markets. You would like to lock in a 3-month

You are hired by a financial company in New Zealand and you have instant access to markets. You would like to lock in a 3-month borrowing cost in NZ$ for your client. You consider a NZ$ 1x4 FRA. But you find that it is overpriced as the market is thin.

So you turn to the Aussie. A$ FRAs are very liquid. It turns out that the A$ and NZ$ forwards are also easily available.

Create a 1x4 NZ$ synthetic using a 1x4 A$ and financial elements already discussed in class.

-This is not homework, it is part of a problem set to study for the exam. The program has an issue with the word "create a" because it is "indicating that you're trying to submit a problem as your own." Thats why I am adding this information and also, I am not interested only on getting the answers but rather the explanation to understand and be able to do a similar problem in case it is presented in the exam.-

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