If the Annual Nominal Interest Rate on 5-Year U

question 21

Multiple Choice

If the annual nominal interest rate on 5-year U.S. Government Treasury bonds is 7%, and the annual nominal interest rate on 5-year Canadian bonds is 5.5%, what is the expected future spot rate in 5 years given that the current spot exchange rate between U.S. dollars and Canadian dollars is $0.587?

• A) $0.595
• B) $0.547
• C) $0.578
• D) $0.630

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Definitions:

Unfair Business Practices

Business practices designed to take advantage of consumer inexperience or ignorance.

Exemplary Damages

Exemplary damages, also known as punitive damages, are awarded in a lawsuit as a punishment to the defendant and to deter others from engaging in similar conduct.

Rescind Agreement

The legal act of unilaterally canceling or terminating a contract by one of the parties involved, effectively restoring the parties to their state before the contract was signed.

Whistle-blower

An individual who exposes illegal, unethical, or wrong practices within an organization to the public or authorities.