Assume the Current Spot Rate Is C$1

question 73

Multiple Choice

Assume the current spot rate is C$1.2103 and the one-year forward rate is C$1.1925.The nominal risk-free rate in Canada is 3 percent while it is 4 percent in the U.S.Using covered interest arbitrage you can earn an extra _____ profit over that which you would earn if you invested $1 in the U.S.

• A)$0.005
• B)$0.006
• C)$0.008
• D)$0.015
• E)$0.018

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Definitions:

Head-Of-Government

The chief officer of the executive branch of a government, often a prime minister or a president, responsible for leading the country's administration and implementing laws.

Organizational Hierarchy

A structured arrangement of roles and responsibilities within an organization, creating a ranked system of authority.

Internal Structure

refers to the arrangement of elements or components within an entity, organization, or system, determining how it functions or operates.

Policy

A course or principle of action adopted or proposed by an organization or individual.