Suppose That the Spot Rate on the U

question 126

Multiple Choice

Suppose that the spot rate on the U.S. dollar is C$.91. The risk-free nominal rate in the U.S. is 8 % while it is only 4 % in Canada. Which one of the following one-year forward rates best establishes the approximate interest rate parity condition?

• A) C$.8678
• B) C$.8736
• C) C$.8855
• D) C$.9056
• E) C$.9212

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Definitions:

Methods

Systematic approaches, techniques, or procedures used to achieve a specific goal or to carry out research.

Brain

The central organ of the nervous system, located in the skull, responsible for coordination and control of bodily functions, processing sensory information, and enabling cognition, emotions, and behavior.

Spinal Cord

A long, thin, tubular bundle of nervous tissue and support cells that extends from the brain down the length of the vertebral column, serving as the main pathway for information connecting the brain and peripheral nervous system.

Functions

The roles or activities specific entities are designed or expected to perform.