Consider the Following -What Should Be the Proper Futures Price for a 1-Year

Consider the following: $$\begin{array} { | l | l | } \hline \text { Risk-free rate in the United States } & 0.04 \text { year } \\\hline \text { Risk-free rate in Australia } & 0.03 / \text { year } \\\hline \text { Spot exchange rate } & 1.67 \mathrm { A } \$ /\$ \\\hline\end{array}$$
-What should be the proper futures price for a 1-year contract?

A) 1.703 A$/$
B) 1.654 A$/$
C) 1.638 A$/$
D) 1.778 A$/$
E) 1.686 A$/$

Correct Answer:

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