The 6-Month Interest Rate on 180 Day U

The 6-month interest rate on 180 day U.S. Treasury Bills is 7.5%. In the foreign exchange markets, the spot rate between U.S. dollars and Australian dollars is 1 Australian dollar = $0.452 and the 180-day (6-month) forward rate is 1 mark = $0.46. Determine the expected rate of interest on 6-month Australian government debt securities, assuming that the interest rate parity between the U.S. dollar and Australian dollar exists.

A) 7.35%
B) 1.77%
C) 5.63%
D) 3.82%