The Spot Exchange Rate for the British Pound Is 0

question 105

Multiple Choice

The spot exchange rate for the British pound is 0.5 GBP/CAD.The one-year interest rate in Canada is 4% and the one-year interest rate in Britain is 5%.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)0.505
• E)0.631

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Definitions:

Ambient Storage

Refers to the storage condition that does not require any controlled temperature or humidity conditions, allowing materials to be stored at room temperature.

Delayed Retrieval

The process where recalling information becomes more challenging after a period of time has passed since the initial learning or exposure.

Short-term Memory

A component of memory where small amounts of information can be stored for a short period.

Sensory Storage

A type of memory storage that temporarily retains impressions of sensory information after the original stimuli have ended.