Multiple Choice
Assume that U.S. interest rate for the next three years is 5%, 6%, and 7% respectively. Also assume that Canadian interest rates for the next three years are 3%, 6%, 9%. The current Canadian spot rate is $.840. What is the approximate three-year forecast of Canadian dollar spot rate if the three-year forward rate is used as a forecast?
A) $.840
B) $.890
C) $.856
D) $.854
Correct Answer:
Verified
Correct Answer:
Verified
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