Assume the Current Spot Rate Is C$1

question 78

Multiple Choice

Assume the current spot rate is C$1.1875 and the one-year forward rate is C$1.1724.The nominal risk-free rate in Canada is 4 percent while it is 3 percent in the U.S.Using covered interest arbitrage you can earn an extra _____ profit over that which you would earn if you invested $1 in the U.S.

• A)$0.018
• B)$0.023
• C)$0.029
• D)$0.031
• E)$0.035

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Definitions:

Nasal Cavity

The hollow space within the nose through which air flows, filtered, warmed, and moistened before reaching the lungs.

Uvula

The uvula is a small, fleshy extension at the back of the soft palate above the throat, playing roles in speech and the triggering of the gag reflex.

Nasopharynx

The upper part of the throat behind the nose, serving as an airway in the respiratory system and a pathway for food and liquids.

Nasal Conchae

Curved bony structures in the nasal cavity that help to moisten, warm, and filter the air we breathe.