What would expect to see to happen to the value of the euro

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Reference no: EM132754270

Problem a) According to Interest Rate Parity, if the Interest rate is 4% in Germany and 6% in the Australia. What would we expect to see to happen to the value of the Euro.

Problem b) If the spot rate for AUD/USD is 0.9600 and the annual interest rate is 7% in Australia and 9% in the USA what is the fair price to pay for a 1 month (30 day) AUD/USD Forward contract purchased today?

Reference no: EM132754270

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