The U.S. risk-free interest rate is 1.8% per year, the spot exchange rate is $0.89 per Canadian dollar, and the one-year forward exchange rate is $0.87 per Canadian dollar. If interest rate parity holds, what is the annual Canadian risk-free interest rate?  

Answer rating: 100% (QA)

Assuming interest rate parity holds we can use the following formula to calculate the annual Canadia... View the full answer