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The U.S. risk-free interest rate is 1.8% per year, the spot exchange rate is $0.89 per Canadian dollar, and the one-year forward exchange rate is
The U.S. risk-free interest rate is 1.8% per year, the spot exchange rate is $0.89 per Canadian dollar, and the one-year forward exchange rate is $0.87 per Canadian dollar. If interest rate parity holds, what is the annual Canadian risk-free interest rate?
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Assuming interest rate parity holds we can use the following formula to calculate the annual Canadia...
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Corporate Financial Management
Authors: Glen Arnold
5th edition
978-1292178066, 129217806X, 273758837, 978-0273758839
