Question
The current CAD/USD cross rate is CAD$1.24. The one year riskless interest rate is 5% in Canada and 10% in the US. The one year
The current CAD/USD cross rate is CAD$1.24. The one year riskless interest rate is 5% in Canada and 10% in the US. The one year forward rate to cross CAD with USD is CAD$1.23. If you can borrow up to CAD$100,000 or USD$80,000 which of the following values best describes the outcome of a riskless trading strategy for you:
a)A profit of CAD $4,113
b) A loss of CAD $7,484
c) A profit of CAD $3,298
d) A loss of CAD $4,387
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Financial Accounting The Impact On Decision Makers
Authors: Gary A Porter, Curtis L Norton
7th Edition
1439080526, 9781439080528
