The Current Spot Rate Is C$1

question 8

Multiple Choice

The current spot rate is C$1.362 and the one-year forward rate is C$1.371.The nominal risk-free rate in Canada is 6 percent while it is 3.5 percent in the U.S.Using covered interest arbitrage you can earn an extra _____ profit over that which you would earn if you invested $1 in the U.S.

• A)$.0018
• B)$.0045
• C)$.0120
• D)$.0180
• E)$.0240

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Definitions:

Destination Hot Spot

A popular or highly sought-after location or place, often visited by tourists or travelers.

New York

A state in the northeastern U.S., known for its cultural diversity and the city of the same name, which is a major financial, cultural, and historical hub.

Comparative Inferences

An analysis approach that deduces relationships or differences based on comparative evaluation of data sets or situations.

Logically Speaking

Pertains to reasoning or arguing in a manner consistent with the principles of logic.