a. How many U.S. dollars are worth one Canadian dollar today? b. How many Canadian dollars are

Question:

a. How many U.S. dollars are worth one Canadian dollar today?

b. How many Canadian dollars are worth one U.S. dollar today?

c. Suppose that you arrange today to buy Canadian dollars in 90 days. How many Canadian dollars could you buy for each U.S. dollar?

d. If forward rates simply reflect market expectations, what is the likely spot exchange rate for the Canadian dollar in 90 days’ time?

e. Look at the table of money rates in the same issue. What is the three-month interest rate on dollars?

f. Can you deduce the likely three-month interest rate for the Canadian dollar?

g. You can also buy currency for future delivery in the financial futures market. Look at the table of futures prices. What is the rate of exchange for Canadian dollars to be delivered in approximately six months’ time?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...

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