Question
The following table shows the US$/C$ spot rate and forward rates as of January 11, 2019. (a) Covert the above exchange rates into the direct
The following table shows the US$/C$ spot rate and forward rates as of January 11, 2019.
(a)
Covert the above exchange rates into the direct quotes.
(b)
Does the forward rate structure imply that the Canadian dollar will depreciate or appreciate against the US dollar over the next
year?
c)What is the implied annual rate of appreciation/depreciation of the Canadian dollar against the US dollar over the next
three months, over the next six months, and over the next year?
d)Now, say the two-year forward rate is US$0.7644/C$. What is the implied annual rate of appreciation/depreciation of the
Canadian dollar against the US dollar over the next two years?
e)What is the implied annualized rate of appreciation/depreciation of the Canadian dollar against the US dollar
between year 1 and year 2?
Note: Assume there are 30 days in a month.
USS/CS rate 0.7555 Spot 1 month 3 months 6 months 1 vear Source: http://fx.sauder.ubc.ca 0.7559 0.7569 0.7583 0.7608
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