Answer:
B) $42,035
Explanation:
Calculation to determine How much can you realize certain profit in U.S. dollar terms
First step is to calculate the repayment liability after one year
Repayment liability = (A$1,176,471 × 1.042)
Repayment liability = A$1,225,882.78
Second step is to determine the investment yield
Investment yield = $1,000,000 ×(1+.035)
Investment yield = $1,000,000 × 1.035
Investment yield= $1,035,000
Third step is to convert the investment yield into A$ at the forward rate of the amount of $0.81
A $ to yield = $1,035,000 ÷ 0.81
A $ to yield= A$1,277,778.22
Now let determine How much can you realize certain profit in U.S. dollar terms
Arbitrage Profit=(A$1,277,778.22-$1,225,882.78)×0.81
Arbitrage Profit= A $51,895.44 × 0.81
Arbitrage Profit = $42,035
Therefore How much can you realize certain profit in U.S. dollar terms will be $42,035
