A Risk-Free Asset in the U

question 316

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$.92 is equal to US$1. What is the approximate two-
Year forward rate if interest rate parity holds?

• A) C$.9017
• B) C$.9088
• C) C$.9136
• D) C$.9189
• E) C$.9272

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Definitions:

Dark Adaptation

The process by which the eyes become more sensitive to low levels of light after exposure to darkness.

Monocular Cue

A visual perception mechanism that allows depth and distance to be discerned with just one eye.

Accommodation Cue

A visual information cue that helps perceive depth by changing the focus of the lens of the eye to see objects at different distances clearly.

Binocular Cue

Visual information taken in by both eyes that enables depth perception, distance estimation, and a three-dimensional view of the world.