Suppose the Spot Rate on the Canadian Dollar Is Can$1

question 48

Multiple Choice

Suppose the spot rate on the Canadian dollar is Can$1.023.The risk-free nominal rate in the United States is 2.6 percent while it is 3.25 percent in Canada.Which one of the following 1-year forward rates best establishes the approximate interest rate parity condition?

• A)Can$1.0296
• B)Can$1.0164
• C)Can$1.0552
• D)Can$1.0867
• E)Can$1.0923

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