The Spot Rate of the U

question 100

Multiple Choice

The spot rate of the U.S. dollar is C$1 = $.94US while the forward rate for one year is C$1 = $.92US. The nominal risk-free rate is 3% in the U.S. and 2% in Canada. How much profit can you make given this situation using covered interest arbitrage?

• A) -$.04
• B) -$.01
• C) $.01
• D) $.03
• E) $.05

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Definitions:

Epithelial Tissue

Epithelial tissue is a layer of cells that forms the outer covering of the body and the lining of internal organs and structures, serving protective, absorptive, and secretory functions.

Bacterial Invasion

The process by which bacteria enter, colonize, and multiply within a host organism.

Glandular

Relating to or affecting glands, especially those that secrete hormones or other substances.

Tubules

Small tubes within the body, especially in organs like the kidneys, where they perform specific functions like filtration and secretion.