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Montreal First Bank is selling forward contracts on the CAD/USD market.What exchange rate will they require for a three-month forward rate, if the spot rate is C$0.9800/USD, and the interest rates are 3% and 2.5% in Canada and the US respectively?
Price-Taker Market
A competitive market situation where individual sellers or buyers have no influence over the market price of a product.
Market Price
The current price at which an asset or service can be bought or sold in a given market.
Economic Incentive
A benefit or penalty that motivates economic behavior or decisions among individuals or organizations.
Price-Taker Market
A market condition where individual buyers or sellers have no power to influence the price of goods and services, typically due to high competition and standardized products.
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