The Current Spot Rate Is C$1

question 47

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 percent while it is 3.5 percent 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

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Definitions:

Cuban Missile Crisis

A 13-day confrontation in 1962 between the United States and the Soviet Union over Soviet ballistic missiles deployed in Cuba, marking the Cold War's closest approach to nuclear conflict.

Tet Offensive

A major military campaign during the Vietnam War, launched in 1968 by forces of the Viet Cong and North Vietnamese Army against South Vietnamese and United States targets.

War On Poverty

A set of government programs introduced by President Lyndon B. Johnson in the 1960s aimed at reducing poverty in the United States.

March On Washington

A significant event in 1963 where civil rights leaders and supporters gathered in Washington, D.C., advocating for civil and economic rights for African Americans.