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Expected excess return in gbp on carry trade strategy

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Dries is a risk-neutral investor based London. He intends to exploit the deviations from UIP between AUD and JPY since the Japanese interest rate is 1% while the Australian interest rate is 10%. From the newspaper he reads that AUD is expected to depreciate by 1% against JPY, and the JPY will depreciate by 7% against GBP. What would be the expected excess return in GBP on his carry trade strategy?

Reference no: EM132432751

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