Need business and finance help with an exchange rate

Dec 18th, 2015
SKTFaker
Category:
Accounting
Price: $5 USD

Question description

Q1

Currently, $1 will buy C$1.43 while $1.26 will buy €1. What is the exchange rate between the Canadian dollar and the euro?

Q2

The current spot rate is C$1.377 and the one-year forward rate is C$1.316. The nominal risk-free rate in Canada is 4 percent while it is 8 percent in the U.S. Using covered interest arbitrage you can earn an extra _____ profit over that which you would earn if you invested $1 in the U.S.


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(Top Tutor) Daniel C.
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School: Boston College
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