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Suppose in the spot market i U.S. dollar equals 1.7500 Canadian dollars. 6-month Canadian securities have an annualized return of 6.00 (and thus a 6-month

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Suppose in the spot market i U.S. dollar equals 1.7500 Canadian dollars. 6-month Canadian securities have an annualized return of 6.00 (and thus a 6-month periodic return of 3.00%), 6-month U.S. securities have an annualized return of 6.50% and a periodic retum of 3.25%. If interest rate parity holds, what is the U.S. dollar Canadian dollar exchange rate in the 180-day forward market? In other words, how many Canadian dollars are required to purchase one U.S. dollar in the 180-day forward market? Do not round the intermediate calculations and round the final answer to four decimal places. a. 1.6410 O b. 1.8156 c. 1.4664 d. 1.5188 e. 1.7458

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