Assume that interest rate parity exists

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Implications of IRP. Assume that interest rate parity exists. You expect that the one-year nominal interest rate in the U.S. is 8%, while the one-year nominal interest rate in Australia is 13%. The spot rate of the Australian dollar is $.65. You will need 10 million Australian dollars in one year. Today, you purchase a one-year forward contract in Australian dollars. How many U.S. dollars will you need in one year to fulfill your forward contract?

Reference no: EM131314875

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