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Assume the following: you have SF3mi. to invest; the current spot rate of SF is AUS $0.80/SF; the
90-day forward rate of SF is AUS $0.75/SF; the 90-day Australian interest rate is 5%; the 90 -day
Swiss interest rate is 8%. What would be the annual yield if you invest in Australia? A) 5% B) 12%
C) 4.8% D) 48%

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Assume the following you have SF3mi to invest the current.pdf

  • 1. Assume the following: you have SF3mi. to invest; the current spot rate of SF is AUS $0.80/SF; the 90-day forward rate of SF is AUS $0.75/SF; the 90-day Australian interest rate is 5%; the 90 -day Swiss interest rate is 8%. What would be the annual yield if you invest in Australia? A) 5% B) 12% C) 4.8% D) 48%