The current spot rate is C$1.380 and the one-year forward rate is C$1.311. The n

Question

The current spot rate is C$1.380 and the one-year forward rate is C$1.311. The nominal risk-free rate in Canada is 5 percent while it is 9 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.

The current spot rate is C$1.380 and the one-year forward rate is C$1.311. The nominal risk-free rate in Canada is 5 percent while it is 9 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.

Explanation / Answer

$0.035

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.