The Spot Rate (S0) for Canadian dollars (CAD) for US dollars (USD) is CAD 1.38 to USD

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The Spot Rate (S0) for Canadian dollars (CAD) for US dollars (USD) is CAD 1.38 to USD 1.

The riskless rate of interest in the US for 3 months (RUS) is 0.2%. The riskness rate for Canada (Foreign Country) is 1%.

According to the Covered Interest Rate Parity relationship, what should be the 3-month Forward rate (F) of CAD for USD? (Note: Your answer should be the number of CAD for USD 1 in the 3-month Forward rate for CAD for USD.)

Posted Date: May 10, 2024 05:07 AM

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The Spot Rate (S0) for Canadian dollars (CAD) for US dollars (USD) is CAD 1.38 to USD

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Expert Answer:

The Covered Interest Rate Parity CIRP relationship states that the forward exchange rate should be e... View the full answer

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