The current spot rate between Australian dollars and Canadian dollars is A$1.015 per $1. The rate on Canadian T-bills is 5% and the rate on an Australian risk-free security is 10%. What is the one-year forward rate if interest rate parity holds?
A) A$0.9689 per $1
B) A$1.0486 per $1
C) A$1.0633 per $1
D) A$1.0827 per $1
E) A$1.1124 per $1
Correct Answer:
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