A US based investor can buy a US bond or an Australian bond. The US bond pays 9% interest and the Australian bond pays 5% interest. If the current exchange rate is Et = 1.5 and the future exchange rate is Et+1 = 1.4, then in terms of US dollars
Answer

the US bond has a higher future value

the Australian bond has a higher future value


both bonds have the same future value

none of the above 
    • 8 years ago