If the Annual Nominal Interest Rate on 5-Year U

question 38

Multiple Choice

If the annual nominal interest rate on 5-year U.S.Government Treasury bonds is 7 percent, and the annual nominal interest rate on 5-year Canadian bonds is 5.5 percent, what is the expected future spot rate in 5 years given that the current spot exchange rate between U.S.dollars and Canadian dollars is $0.587?

• A)$0.595
• B)$0.547
• C)$0.578
• D)$0.630