An investor located in the US has two investment options for her $105,000.One option is the US, where the interest rate is 3.5%. The other option isAustralia, where the interest rate is i. The current exchange rate is $1 US buys1.6 Australian dollars and the future expected exchange rate is $1 US buys 1.62Australian. If the investor believes the the two future values are the same,what is in?O 3.10%O 3.95%O 4.79%O5.25%

Investment amount = 105000 $ Interest rate in US = 3.5 % Current exchange rate USD/AUD = 1.6…

Answered: 1.6 Australian dollars and the future…

1.6 Australian dollars and the future expected exchange rate is $1 Australian. If the investor believes the the two future values are the same, what is in? O 3.10% O 3.95% O 4.79% O5.25 %

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

An investor located in the US has two investment options for her $105,000.
One option is the US, where the interest rate is 3.5%. The other option is
Australia, where the interest rate is i. The current exchange rate is $1 US buys
1.6 Australian dollars and the future expected exchange rate is $1 US buys 1.62
Australian. If the investor believes the the two future values are the same,
what is in?
O 3.10%
O 3.95%
O 4.79%
O5.25%

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