You want to invest $1,000,000,000 for one year

You want to invest $1,000,000,000 for one year

Subject: Business    / Finance
Question

You want to invest $1,000,000,000 for one year. Assume the interest rate in the Australia is6% and the interest rate in the United States is 1%. The current spot rate is AUD/$ 1.32 and the one-year forward rate is AUD/$ 1.3307. Would you prefer investing in Australia or in the UnitedStates? Why? Compute the proceeds of both strategies.