A Risk-Free Asset in the U

question 81

Multiple Choice

A risk-free asset in the U.S.is currently yielding 4 percent while a Canadian risk-free asset is yielding 2 percent.Assume the current spot rate is C$1.2103.What is the approximate three-year forward rate if interest rate parity holds?

• A)C$1.1391
• B)C$1.1744
• C)C$1.2241
• D)C$1.2295
• E)C$1.2470

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Definitions:

Expatriate Manager

A manager who works in a country other than her or his home country.

Glass Ceiling

A metaphor for the invisible barriers that prevent certain groups, often women and minorities, from advancing to higher levels of leadership and management.

Ambiguity

A situation or statement that is unclear or open to more than one interpretation.

Uncertainty

The state of having limited knowledge where it is impossible to exactly describe the existing state, a future outcome, or more than one possibility.