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 5507 in 9 months. Having taken this course, you know you can lock in the AUD rate for this CAD receivable using a money market hedge. (Annualized) 9-month interest rates in Canada are 8.6%-8.4%, and 9-month interest rates in Australia are 3%-2.8%. The current bid-ask spot rates are 1.2375-90 AUD/CAD.

What is the locked in AUD value of this present?

a. 6536.4262

b. 7199.4115

c. 7105.2638

d. 4639.6988

e. 7095.2517

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