Suppose That the Spot Rate on the U

question 100

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 percent while it is only 4 percent 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:

Market Focus

Market focus refers to a strategic orientation where a business channels its efforts and resources towards serving a particular market segment or niche effectively.

Sales Orientation

A business approach that prioritizes selling as many products or services as possible, often without a specific focus on customer needs or product quality.

Specific Needs

Particular requirements or desires of an individual or entity.

Henry Ford

American industrialist and founder of Ford Motor Company who revolutionized factory production with his assembly-line methods.