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Suppose the spot exchange rate for the Canadian dollar is Can$1.01 and the six-month forward rate is Can$1.03. (Enter your answer as directed, but do
Suppose the spot exchange rate for the Canadian dollar is Can$1.01 and the six-month forward rate is Can$1.03. (Enter your answer as directed, but do not round intermediate calculations.) |
Required: |
(a) | Which is worth more, a U.S. dollar or a Canadian dollar? |
(Click to select)Canadian dollarU.S. dollar | |
(b) | Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.49? (Round your answer to 2 decimal places (e.g., 32.16).) |
Cost in U.S dollar | $ |
(c) | Is the U.S. dollar selling at a premium or a discount relative to the Canadian dollar? |
(Click to select)discountpremium |
(d) | Which currency is expected to appreciate in value? |
(Click to select)U.S. dollarCanadian dollar |
(e) | Which country do you think has higher interest rates |
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