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Business, 06.03.2020 23:52 shelby8385

Assume that the U. S. one-year interest rate is 3% and the one-year interest rate onAustralian dollars is 6%. The U. S. expected annual inflation is 5%, while the Australian inflation isexpected to be 7%. You have $100,000 to invest for one year and you believe that PPP holds. The spotexchange rate of an Australian dollar is $0.689. What will be the yield on your investment if you invest inthe Australian market?

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