The Current Spot Rate Is C$1

question 255

Multiple Choice

The current spot rate is C$1.1578 and the one-year forward rate is C$1.1397. The nominal risk-free rate in Canada is 5 percent while it is 6 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) $.0033
• B) $.0067
• C) $.0084
• D) $.0633
• E) $.0667

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Definitions:

Defecating

The act of expelling feces from the body's large intestine through the anus.

Ego Ideal

A component of the personality comprising the standards and aspirations for behaviors that one strives to achieve.

Id

in Freudian psychoanalysis, it represents the part of the human psyche that is unconscious and contains the basic drives and instinctual desires.

Object Relations Theory

The psychodynamic theory that views the desire for relationships as the key motivating force in human behavior.