The Interest Rate on a 1-Year Canadian Security Is 7

Multiple Choice

The interest rate on a 1-year Canadian security is 7.8%. The current exchange rate is C$ = US $0.79. The 1-year forward rate is C$ = US $0.77. The return (denominated in U.S. $) that a U.S. investor can earn by investing in the Canadian security is

A) 3.59%.
B) 4.00%.
C) 5.07%.
D) 8.46%.
E) None of the options