Assume That U

question 36

Multiple Choice

Assume that U.S. interest rate for the next three years is 5%, 6%, and 7% respectively. Also assume that Canadian interest rates for the next three years are 3%, 6%, 9%. The current Canadian spot rate is $.840. What is the approximate three-year forecast of Canadian dollar spot rate if the three-year forward rate is used as a forecast?

• A) $.840
• B) $.890
• C) $.856
• D) $.854

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Definitions:

Hissing Noise

A sound often produced by gas or steam escaping through a small orifice or by certain animals as a defensive mechanism.

Injured Valves

Refers to damage or dysfunction in the heart valves, which can disrupt normal blood flow and heart function.

Atrial Natriuretic Peptide

A hormone produced by the heart's atrial cells that regulates blood pressure and fluid balance by reducing sodium reabsorption in the kidneys.

Sodium Excretion

Sodium excretion involves the process by which the kidneys remove excess sodium ions from the body, a critical function for maintaining electrolyte balance and blood pressure.