The Quoted Interest Rate on a 3 Month Canadian Security

question 14

Multiple Choice

The quoted interest rate on a 3 month Canadian security is 8%.The current exchange rate is C $1 = US $0.68.The 3 month forward rate is C $1 = US $0.70.The APR (denominated in US$) that a U.S.investor can earn by investing in the Canadian security is __________.

• A) 5.00%
• B) 7.25%
• C) 20.00%
• D) 22.43%

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Definitions:

Autonomous

Having the ability or freedom to act independently, make one's own decisions, and govern oneself.

Self-reliance

The reliance on one's own capabilities, judgment, or resources.

Passivity

A trait or behavior characterized by a lack of response or action in situations where one might be expected to engage or make a decision.

Rough and Tumble

A form of play involving physical activities like running, climbing, and play-fighting, important for a child's development.