A Risk-Free Asset in the U

question 81

Multiple Choice

A risk-free asset in the U.S.is currently yielding 4 percent while a Canadian risk-free asset is yielding 2 percent.Assume the current spot rate is C$1.2103.What is the approximate three-year forward rate if interest rate parity holds?

• A)C$1.1391
• B)C$1.1744
• C)C$1.2241
• D)C$1.2295
• E)C$1.2470

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Definitions:

Tribune

In church architecture, a gallery over the inner aisle flanking the nave.

Speyer Cathedral

A Romanesque cathedral located in Speyer, Germany, known for its monumental architecture and historical significance as the final resting place of several Holy Roman Emperors.

Modern Country

A nation-state characterized by a developed economy, technological infrastructure, and a contemporary social structure.

Cathedral Complex

A group of buildings that includes a cathedral (a principal church of a diocese) along with associated structures like cloisters and bishops' palaces.