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One-year interest rates are 7% in the U.S. and 4% in Canada. Jack the carry trader borrows C$3,000,000 to execute a carry trade. At the

One-year interest rates are 7% in the U.S. and 4% in Canada. Jack the carry trader borrows C$3,000,000 to execute a carry trade. At the start, the exchange rate is $.892/CAD. After one year, the exchange rate is $.874/CAD

That's part of the question -- understanding which currency to borrow based on your belief about what direction the NZ$ is expected to move.

What is Jacks USD profit or loss over the year?

B. When Jack starts this trade, he is hoping that the Canadian dollar doesnt ______________.

C. When Jack starts this trade, he is hoping that the USD doesnt_______________

D. What is the BEEX in one year? (place in terms of USD/CAD to 3 decimal places)

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