Multiple Choice
The present exchange rate is C$ = U.S. $0.78. The 1-year future rate is C$ = U.S. $0.76. The yield on a 1-year U.S. bill is 4%. A yield of __________ on a 1-year Canadian bill will make an investor indifferent between investing in the U.S. bill and the Canadian bill.
A) 2.4%
B) 1.3%
C) 6.4%
D) 6.7%
E) None of the options are correct.
Correct Answer:
Verified
Correct Answer:
Verified
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