The 6 month interest rate in Australia is 0.6%. The spot exchange rate for Australian dollars is 1.4063 to the U.S.dollar. The 6 months forward rate is 1.4259 to the U.S. dollar. These prices indicate that the 6 month risk-free rate in the U.S. is
A) 6.00%.
B) 3.02%.
C) 3.42%.
D) 2.00%.
Correct Answer:
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