Question: Because it is unlikely she will be able to visit you this year, your wealthy Canadian aunt wants to send you a present for your

Because it is unlikely she will be able to visit you this year, your wealthy Canadian aunt wants to send you a present for your birthday. You expect she will give you CAD 4664 in 10 months.

Having taken this course, you know you can lock in the AUD rate for this CAD receivable using a money market hedge.

If (annualized) 10-month interest rates in the Canada are 7%, 10-month interest rates in Australia are 3.2%, and the current spot rate is 1.8 AUD/CAD, what is the locked in AUD value of this birthday present?

a. 1.8555

b. 8144.0050

c. 8704.3256

d. 2671.0317

e. 8654.1429

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