If 6-Month USD/CAD Forward Rates Are Quoted at 40/45, Which

question 376

Multiple Choice

If 6-month USD/CAD forward rates are quoted at 40/45, which of the following statements is correct?

• A) USD rates are higher than CAD rates in the 6-month
• B) CAD rates are higher than USD rates in the 6-month
• C) There is a positive USD yield curve
• D) There is not enough information to decide

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Definitions:

Accrued Interest Receivable

Interest that has been earned but not yet received in cash, representing an asset on the balance sheet.

Notes Receivable-Perez

A note receivable account representing money owed to the entity by Perez, typically documented through a formal promissory note.

Collateralized

Secured by an asset pledged as security for repayment of a loan, protecting the lender by providing a source of recovery in case of default.

Receivables

Amounts owed to a company by customers for goods or services that have been delivered but not yet paid for.