Tag: Australian dollar
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How would the profit figure change if the Australian dollar continues to strengthen at the same rate as it has done over the previous year?
Question 1 A trader, who is considering uncovered interest arbitrage between the US dollar (USD) and Australian dollar (AUD), faces the following data: Funds available: 2 million USD Spot exchange rate: 0.94 AUD per USD Spot exchange rate one year ago: 1.00 AUD per USD USD 3-month interest rate: 0.12% per annum AUD 3-month interest…