Question 8.MSE.9: Assume that interest rate parity exists. The one-year nomina...

International Financial Management

Assume that interest rate parity exists. The one-year nominal interest rate in the United States is 7 percent, while the one-year nominal interest rate in Australia is 11 percent. The spot rate of the Australian dollar is $.60. Today, you purchase a one-year forward contract on 10 million Australian dollars. How many U.S. dollars will you need in one year to fulfill your forward contract?

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