Question: Continue with the data from the question above. Using the formula for Interest rate parity, F 1 =S 0 (1+R Quote Currency )/(1+R Base Currency

Continue with the data from the question above. Using the formula for Interest rate parity,

F1=S0(1+RQuote Currency)/(1+RBase Currency),

what one-year Forward Rate should prevail in the market?

Select one:

a. AUD/CAD = 0.9321

b. AUD/CAD = 0.9280

c. AUD/CAD = 0.9245

d. AUD/CAD = 0.9200

e. AUD/CAD = 0.9176

(I know the answer is 0.9321, I just want someone to show me the calculation, Thanks).

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