The Current Spot Rate Is C$1

question 89

Multiple Choice

The current spot rate is C$1.400 and the one-year forward rate is C$1.364.The nominal risk-free rate in Canada is 2% while it is 4% in the U.S.Using covered interest arbitrage you can earn an extra _____ profit over that which you would earn if you invested $1 in the U.S.

• A)$.0000
• B)$.0033
• C)$.0069
• D)$.0833
• E)$.0840

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Definitions:

Founder Effect

A form of genetic drift where a new population is established by a very small number of individuals, leading to reduced genetic variation from the original population.

Human Populations

Groups of humans living in a specific geographic area, characterized by shared genetics, culture, and societal structures.

Genetic Diversity

The total number of genetic characteristics in the genetic makeup of a species, contributing to species survival and adaptation.

Colonization

The process by which a central system of power dominates the surrounding land and its components, often referring to historical conquests and settlements.