The Interest Rate on a 1-Year Canadian Security Is 7

question 23

Multiple Choice

The interest rate on a 1-year Canadian security is 7.8%. The current exchange rate is C$ = US $0.79. The 1-year forward rate is C$ = US $0.77. The return (denominated in U.S. $) that a U.S. investor can earn by investing in the Canadian security is

• A) 3.59%.
• B) 4.00%.
• C) 5.07%.
• D) 8.46%.
• E) None of the options

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Definitions:

First Home

Typically refers to the first house that a person or family purchases and lives in.

Consumer Decision-Making Process

The steps that consumers go through before, during, and after making purchases, including need recognition, information search, evaluation, purchase, and post-purchase behavior.

Problem Recognition

The initial step in the consumer decision-making process, where an individual realizes a difference between their current state and a desired state.

Cognitive Dissonance

The mental discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time.