The one-year interest rates for the USD and the AUD are: USD = 6% and AUD=4%. Assume

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The one-year interest rates for the USD and the AUD are: USD = 6% and AUD=4%. Assume USD/AUD = 0.73. Say you borrow 120,000 units of a currency at t=0 and that the spot rate does not change between t=0 and t=1, so USD/AUD = 0.73.

What is your carry trade profit at t=1 in AUD?

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International Financial Management

ISBN: 9780357130544

14th Edition

Authors: Jeff Madura

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Posted Date: May 19, 2023 03:01 AM

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The one-year interest rates for the USD and the AUD are: USD = 6% and AUD=4%. Assume

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AUD interest rate 4 USDAUD exchange rate 073 Amount bo... View the full answer

International Financial Management

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