You are a CFO of Tattoos and Piercings, International, the US based corporation. You are planning a
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Currently:
______________________________________________Quoted Price
Australian Dollar AUD: USD spot USD.....................................0.9000
Australian Dollar AUD: USD 60 day forward USD...................0.8950
An Australian bank pay for short term deposit in Australian dollars 0.5% for 60 days or, you can use your corporate cash currently denominated in American Dollars that is on deposit with Citibank at 4% APR compounded daily. You do not want to take any risks with the currency fluctuation. What are your two choices? Present your calculations clearly to substantiate your choice with numbers.
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