Assume a Risk-Free Asset in the U

question 7

Multiple Choice

Assume a risk-free asset in the U.S.is currently yielding 2.53 percent while a Canadian risk-free asset is yielding 2.62 percent.The current spot rate is C$1.012.What is the approximate 3-year forward rate if interest rate parity holds?

• A)C$1.0061
• B)C$1.0023
• C)C$1.0147
• D)C$.9855
• E)C$.9939

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Definitions:

Intangible Property

Assets that do not have a physical presence, such as copyrights, patents, and trademarks.

Joint Tenancy

Shared property ownership with a right of survivorship.

Tenants in Common

A form of co-ownership where each tenant owns a separate and undivided interest in the property, and upon death, their share passes to their heirs or designated beneficiaries.

Severing

The act of legally separating or dividing a contract, legal obligation, or property right into distinct parts.