The Spot Exchange Rate for the British Pound Is 0

question 92

Multiple Choice

The spot exchange rate for the British pound is 0.6 GBP/CAD.The one-year interest rate in Canada is 5% and the one-year interest rate in Britain is 6%.Based on these rates,what one-year forward exchange rate is consistent with the absence of arbitrage?

• A)0.606
• B)0.612
• C)0.617
• D)0.624
• E)0.631

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Definitions:

Article 9

Article 9 refers to a part of the Uniform Commercial Code (UCC) that regulates secured transactions, or transactions that involve a creditor taking a security interest in the debtor's property.

Mechanic's Lien

A security interest granted over an item of property to ensure the payment of the work performed and materials supplied in the building or repairing of that property.

UCC

This extensive legal framework, the Uniform Commercial Code, establishes the rules governing commercial transactions in the United States.

Tenders

Formal offers to carry out work, supply goods, or buy land, goods, or services at a specified price.