David Estimated a Six-Month Forward Rate of C$1

question 19

Multiple Choice

David estimated a six-month forward rate of C$1.01 per US$.The six-month US$ interest rate is currently 4%.If David's estimate is based on IRP,what was the observed current six-month Canadian interest rate,if the spot rate is C$1.02 per US$?

• A) 5.03%
• B) 2.03%
• C) 2.98%
• D) 2.05%

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Definitions:

Reinforcement Theory

A theory in psychology that suggests that behavior is motivated by its consequences, with positive outcomes encouraging the behavior and negative outcomes discouraging it.

Manipulative

Describes behavior that is skilful in controlling or influencing others to one's own advantage, often with deceitful or dishonest intentions.

Insincere

Describes a lack of genuineness or honesty in expression or action; not expressing genuine feelings.

Self-Monitoring

A psychological theory that pertains to how individuals regulate their behavior to accommodate social situations, varying from being highly adaptable to being consistent across contexts.