Explain interest rate parity

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Reference no: EM131878525

The U.S. dollar (USD) deposit interest rate is 1%, while Australia's (AUD) rate is 3.5%, with a 1.5000 AUD/USD exchange rate.

A) Explain Interest Rate Parity (IRP).

B) What should be the 1-year forward exchange rate for AUD/USD under Interest Rate Parity

Reference no: EM131878525

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