Assume That an Item Costs $100 in the U

question 82

Multiple Choice

Assume that an item costs $100 in the U.S.and the exchange rate between the U.S.and Canada is: $1 = C$1.27.Which one of the following concepts supports the idea that the item that sells for $100 in the U.S.is currently selling in Canada for $127?

• A)unbiased forward rates condition
• B)uncovered interest rate parity
• C)international Fisher effect
• D)purchasing power parity
• E)interest rate parity

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