Explain how you would trade if the two year forward price

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Reference no: EM131619319

You are in America. Interest rates are currently 5.25% in Australia, and are 2.7% in the US. If the current exchange rate allows you to trade $US1 for $A1.3, what is a fair forward price to buy $A1000 in two years time? Explain how you would trade if the two year forward price for $A1000 was $US700.

Reference no: EM131619319

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