Assume an FI Sells A$100 Million for US Dollars on the Spot

Assume an FI sells A$100 million for US dollars on the spot currency markets at an exchange rate of A$1.10 to US $1.00 and invests the US dollar assets at an interest rate of 12% for one year.What are the Australian dollar proceeds from the US dollar investment (round to two decimals) ?

A) A$100.00 million
B) A$112.00 million
C) A$90.91 million
D) A$101.82 million

Correct Answer:

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