The Current Spot Rate Is C$1

question 28

Multiple Choice

The current spot rate is C$1.362 and the one-year forward rate is C$1.371.The nominal risk-free rate in Canada is 6% while it is 3.5% 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)$.0018
• B)$.0045
• C)$.0120
• D)$.0180
• E)$.0240

---

Definitions:

Inflation And Unemployment

Economic phenomena, with inflation being the rate at which the general level of prices for goods and services is rising, and unemployment representing the portion of the workforce that is not currently employed but actively seeking employment.

Government Expenditures

The total amount of money the government spends in a certain period, including spending on healthcare, education, and infrastructure.

Adverse Supply Shock

An Adverse Supply Shock is an unexpected event that reduces supply, leading to higher prices and lower quantities of goods available.

Internet Usage

Refers to the various activities and tasks performed by individuals or organizations over the internet, including communication, information search, entertainment, and e-commerce.