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The exchange rate between USD and CD is 1.34 and the risk-free rate in US is 4.5% and the 1 year forward exchange rate


 

The exchange rate between USD and CD is 1.34 and the risk-free rate in US is 4.5% and the 1 year forward exchange rate is 1.29. Find the risk-free rate in Canada. What is general relationship between the exchange rate and interest rate?

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