If the Spot Rate Is USD/CAN1

question 120

Multiple Choice

If the spot rate is USD/CAN1.67 and the 1-month forward rate is USD/CAN1.70:

• A)the Canadian dollar is trading at a forward premium
• B)the Canadian dollar is trading at a forward discount
• C)the US dollar is trading at a forward discount
• D)the US dollar is trading at a forward premium
• E)the USD is at a forward premium and the CAN is at a forward discount.

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Definitions:

Spider Web Pricing

A pricing strategy that involves setting a low price for one product to attract customers and then raising prices once the customer engagement has been established.

Price Discrimination

A pricing strategy where a company charges different prices for the same product or service to different consumers, often based on factors like location, age, or purchasing history.

Practices

Routine actions or procedures followed by individuals or organizations in their professional or daily activities.

Goods

Tangible products or items that are produced or manufactured for sale and consumption.