The Spot Rate Between Canada and the U

question 33

Multiple Choice

The spot rate between Canada and the U.S.is Can$1.2381 = $1,while the one-year forward rate is Can$1.2379 = $1.The risk-free rate in Canada is 2.8 percent.The risk-free rate in the U.S.is 3.6 percent.How much profit can you earn on a loan of $1,000 by utilizing covered interest arbitrage?

• A)-$8.14
• B)-$7.83
• C)-$5.36
• D)$3.49
• E)$6.57