A Risk-Free Asset in the U

question 27

Multiple Choice

A risk-free asset in the U.S.is currently yielding 3 percent while a Canadian risk-free asset is yielding 2 percent.The current spot rate is C$.72 is equal to $1.What is the approximate two-year forward rate if interest rate parity holds?

• A)C$.7057
• B)C$.7128
• C)C$.7136
• D)C$.7189
• E)C$.7272

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