Assume that the Australian one-year interest rate is 5% and the one-year interest rate on...
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Finance
Assume that the Australian one-year interest rate is 5% and the one-year interest rate on euros is 8%. You borrow A$100,000 to invest. The euro's spot exchange rate is A$1.40. What is the rate of return on your investment if you invest in euro market, when the international Fisher effect (IFE) holds? Select one:
a. 0%
b. 5%
c. 3%
d. 2.78%
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