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:

Introspection

The examination or observation of one's own mental and emotional processes.

Model Minority

A stereotype that characterizes a particular minority group as exemplifying academic achievement, professionalism, and law-abidance, often ignoring individual diversity and challenges within the group.

Political Activism

The effort to promote, impede, or direct social, political, economic, or environmental reform or stasis with the desire to make improvements in society.

Work Ethic

A set of values centered on the importance of hard work, diligence, and responsibility in achieving success.