Suppose that the risk-free rates in the United States and in Canada are 3% and 5%, respectively. The spot exchange rate between the dollar and the Canadian dollar (C$) is $0.80/C$. What should the futures price of the C$ for a one-year contract be to prevent arbitrage opportunities, ignoring transactions costs.

Multiple Choice

• $1.00/C$

• $1.70/C$

• $0.88/C$

• $0.78/C$

• $1.22/C$