Suppose that the annual interest rate in Australia is 3%, and the annual IR rate in the US is 2.5%. In this case, you would expect the Aus $ to be trading at a 12-month forward _____ of about ____ %. (Use the approximated equation for IRP)
a. premium; 1.2
b. premium; 0.5
c. discount; 1.2
d. discount; 0.5