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Does interest rate parity hold

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Reference no: EM132497852

Assume the following information is available for Australia and New Zealand:

Australia New Zealand

Nominal interest rate

4% 6%

Expected inflation

2% 5%

Spot rate AUD / NZD 1.13

One-year forward rate AUD / NZD 1.10

Does Interest Rate Parity hold? Demonstrate using $100,000 AUD as the starting figure

Reference no: EM132497852

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