David Estimated a Six-Month Forward Rate of C$1

question 40

Multiple Choice

David estimated a six-month forward rate of C$1.01 per US$.The six-month US$ interest rate is currently 4%.If David's estimate is based on Interest Rate Parity, what was the observed current six-month Canadian interest rate, if the spot rate is C$1.02 per US$?

• A)5.03%
• B)2.03%
• C)2.98%
• D)2.05%

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Definitions:

British Strongholds

Strategic locations controlled by the British, often referring to military or colonial sites that held significant importance.

Water Escape Route

A route primarily through water bodies used for escape, often in emergency situations like floods or by escaping prisoners/slaves.

The American Crisis

A series of pamphlets written by Thomas Paine during the American Revolutionary War, aimed at bolstering American morale and resistance against British rule.

Demoralizing Military Losses

Military defeats that significantly lower the morale, confidence, and spirit of the affected country or armed forces.