The Interest Rate on a 1-Year Canadian Security Is 7

question 23

Multiple Choice

The interest rate on a 1-year Canadian security is 7.8%. The current exchange rate is C$ = US $0.79. The 1-year forward rate is C$ = US $0.77. The return (denominated in U.S. $) that a U.S. investor can earn by investing in the Canadian security is

• A) 3.59%.
• B) 4.00%.
• C) 5.07%.
• D) 8.46%.
• E) None of the options

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Definitions:

Exemptions

Deductions allowed by tax authorities on a taxpayer's income, often based on the number of dependents, reducing the taxable income.

W-2's Filing

The process of submitting the Form W-2, which reports an employee's annual wages and the amount of taxes withheld from their paycheck, to the IRS.

Maximum Penalty

The highest possible fine or punishment that can be imposed for a particular violation or offense under a legal or regulatory framework.

FUTA Tax

FUTA Tax, or the Federal Unemployment Tax Act tax, is a payroll tax paid by employers to fund state workforce agencies.