How many U.S. dollars will you need in one year to fulfill your forward contract? Determine the expected amount of dollars to be paid by the Wake Forest Co. for the pesos in one year.
1. Implication of IRP. Assume that interest rate parity exists. You expect that the one-year nominal interest rate in the U.S. is 7%, while the one-year nominal interest rate in Australia is 11%. The spot rate of the Australian dollar is $.60. You will need 10 million Australian dollars in one year. Today, you purchase a one-yea