The One-Year Forward Exchange Rate for the British Pound Is

question 44

Multiple Choice

The one-year forward exchange rate for the British pound is 1.90 CAD/GBP.If the one-year Canadian interest rate is 4% and the one-year British interest rate is 6%,compute the implied spot exchange rate in CAD/GBP.

• A)1.89
• B)1.90
• C)1.92
• D)1.94
• E)1.97

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Definitions:

Dividends Received

Income received by investors for owning shares of a company, typically distributed from the company's earnings.

Operating Activities

The portion of cash flow that relates to the core operations of a business, including cash receipts from sales and cash payments for goods and services.

Payment Of Dividends

The allocation of part of a corporation's profits to its shareholders, as decided by the corporation's board of directors.

Financing Activities

This term refers to transactions and events through which a business raises funds to operate and expand, such as issuing debt or selling equity.