What is the return you will realize after one year

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You have $100,000 to invest 1) The current ask quote for Australian dollars (A$) in the spot market is $0.71 2) The current bid quote for Australian dollars (A$) in the spot market is $0.70 3) The one-year forward rate (ask) for A$ is $0.71 4) The one year forward rate (bid) for A$ is $0.70 5) The one-year U.S. interest rate is 7% 6) The one-year Australian interest rate is 9%. If you conduct covered interest arbitrage, what is the return you will realize after one year?

Reference no: EM132014548

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