Montreal First Bank Is Selling Forward Contracts on the USD/CAD

question 46

Multiple Choice

Montreal First Bank is selling forward contracts on the USD/CAD exchange market.What exchange rate would they require for a three-month forward rate, if the spot rate is C$ 1.0200/USD and the interest rates are 3% and 2.5% in Canada and the US respectively?

• A)C$1.0249
• B)C$1.0213
• C)C$1.0187
• D)C$1.0200

Understand the considerations for preferring high or low dividend payouts based on various contexts.

Understand how federal monetary policies affect economic growth, interest rates, and the availability of credit.

Recognize the types and purposes of bonds issued by local governments and other entities.

Describe the flow of funds in the financial system and the roles of households and businesses as savers or borrowers.

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Definitions:

Inequality

The state of not being equal, especially in terms of status, rights, and opportunities, leading to disparities in income, wealth, and living conditions.

Preconditions

Conditions or requirements that must exist or be met before a certain event can occur or a process can proceed.

Economic Elites

A group of people who possess a disproportionate amount of wealth and economic power in a society.

Middle Classes

A social group between the upper and working classes, characterized by moderate to high income levels, education, and professional occupations.