The Spot Exchange Rate for Canadian Dollar(C$) Is U

question 97

Multiple Choice

The spot exchange rate for Canadian Dollar(C$) is U.S.$0.68/C$.The six-month interest rate in U.S.is 2.5% and 3.0% in Canada.What is the six-month forward rate for Canadian Dollar?

• A)U.S.$0.6734/C$
• B)U.S.$0.6767/C$
• C)U.S.$0.6833/C$
• D)U.S.$0.6866/C$

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Definitions:

Perfect Competition

A market structure characterized by a complete absence of rivalry among the producers, with many buyers and sellers, each of whom has a negligible impact on the market.

Identical Service

A service that is exactly the same in every feature and aspect when compared to another service.

Efficient Output

The level of production at which a company or economy can produce goods at the lowest possible cost per unit, maximizing the allocation of resources.

Perfect Competitor

A hypothetical firm in a perfectly competitive market that cannot influence the market price of its product and takes the market price as given.