CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

Based on covered interest rate parity, if the one year interest rate for Australian dollar (AUD) is 4% and 2% for U.S. dollars, and the exchange rate is 0.9654 (AUD/USD), what is the expected future exchange rate in one year?
Correct Answer: 0.9654 x (1 + 0.04 ) / (1 + 0.02) = 0.9843

User Contributed Comments 1

User Comment
daverco It's Spot rate x [(1+foreign interest rate) / (1+domestic interest rate)]
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