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Spot Exchange Rate One-Year Forward Exchange Rate Canadian dollar (U.S. dollar/Canadian dollar) 0.8798 0.8935 The current one-year interest rate on U.S. Treasury securities is 6.35%.

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Spot Exchange Rate One-Year Forward Exchange Rate Canadian dollar (U.S. dollar/Canadian dollar) 0.8798 0.8935 The current one-year interest rate on U.S. Treasury securities is 6.35%. If interest rate parity holds, what is the expected yield on one-year Canadian securities of equal risk? 0 4.72% 5.43% 3.78% O 4.25% Which of the following statements is implied by interest rate parity theory? O If two countries have the same inflation rate, they should have the same interest rate, too. An investment in one's home country should have the same return as a similar investment in a foreign country. O Interest rates in all countries should be the same. Interest rates in all countries with the same political risk should be the same

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