Question: Assume that the U . S . one - year interest rate is 4 % , and the Australian one - year interest rate is
Assume that the US oneyear interest rate is and the Australian oneyear interest rate is The US expected annual inflation is while the Australian inflation is expected to be You have USD to invest for one year and you believe that exante relative PPP holds. The spot exchange rate of AUDUSD is What will be the expected USD holding period return on your investment if you invest in the oneyear Australian dollars AUD deposit in the Australian money market?
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