Calculate the monthly interest rate differences and estimate the AUD/USD exchange rate for each month from November 2017 through September 2018 using the interest parity model. Display the following results in a single table with workings: iii. the difference between the actual and the forecasted exchange rates for each month (i.e. forecast error); and, (2 points)

 

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01-Oct-2017 01-Nov-2017 01-Dec-2017 01-Jan-2018 01-Feb-2018 01-Mar-2018 01-Apr-2018 01-May-2018 01-Jun-2018 01-Jul-2018 01-Aug-2018 01-Sep-2018 01-Oct-2018 Exchange rate (USD per AUD) AUD 1 year zero rate (%, p.a.) USD 1 year zero rate (%, p.a.) 0.769764 1.6200 1.3349 0.756659 1.5600 1.4469 0.780823 1.5600 1.6189 0.81011 1.6100 1.7618 0.779362 1.6000 1.9247 0.767813 1.5800 2.0319 0.757518 1.5800 2.0968 0.757117 1.5700 2.2771 0.734646 1.5500 2.2867 0.74073 1.5400 2.3565 0.726164 1.5600 2.4574 0.722543 1.5400 2.4866 0.709925 1.5600 2.6196 01-Oct-2017 01-Nov-2017 01-Dec-2017 01-Jan-2018 01-Feb-2018 01-Mar-2018 01-Apr-2018 01-May-2018 01-Jun-2018 01-Jul-2018 01-Aug-2018 01-Sep-2018 01-Oct-2018 Exchange rate (USD per AUD) AUD 1 year zero rate (%, p.a.) USD 1 year zero rate (%, p.a.) 0.769764 1.6200 1.3349 0.756659 1.5600 1.4469 0.780823 1.5600 1.6189 0.81011 1.6100 1.7618 0.779362 1.6000 1.9247 0.767813 1.5800 2.0319 0.757518 1.5800 2.0968 0.757117 1.5700 2.2771 0.734646 1.5500 2.2867 0.74073 1.5400 2.3565 0.726164 1.5600 2.4574 0.722543 1.5400 2.4866 0.709925 1.5600 2.6196

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Following are the formulae used for each column in table given below Exchange Rate AUD USD 1 Exchange Rate USDAUD Per Month Interest Rate AUD AUD 1 Ye... View the full answer