Which currency is trading at a forward premium

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Reference no: EM131327124

You expect to receive an income in JPY in 180 days from now. You wish to guarantee the AUD equivalent of your JPY income, using a forward market transaction. The current spot rate is AUD/JPY 95.46, with money market interest rates over six months of 2.8% per annum in AUD and 0.18% per annum in JPY. What will be the six month forward rate, and which currency is trading at a forward premium?

A. 94.23, with a forward premium on the JPY

B. 94.23, with a forward premium on the AUD

C. 96.71, with a forward premium on the AUD

D. 96.71, with a forward premium on the JPY

E. 92.96, with a forward premium on the JPY

Reference no: EM131327124

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