Suppose the spot exchange rate for the Canadian dollar is Can$1.11 and the six-month forward rate is Can$1.13.

a. Which is worth more, a U.S. dollar or a Canadian dollar?

Canadian dollar/ U.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$2.80? (Round your answer to 3 decimal places. (e.g., 32.161)) Cost in U.S. dollars $=?

c. Is the U.S. dollar selling at a premium or a discount relative to the Canadian dollar?

Discount /Premium

d. Which currency is expected to appreciate in value?

U.S. dollar /Canandian dollar

e. Which country do you think has higher interest rates - the United States or Canada?

Canada /United States