Suppose the interest on Russian government bonds is 7.5%, and the current exchange rate is 28 RUB

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Suppose the interest on Russian government bonds is 7.5%, and the current exchange rate is 28 RUB per CAD. If the forward exchange rate is 28.5 RUB per CAD, and the current Canadian risk-free interest rate is 4.5%, what is the implied credit spread for Russian government bonds?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...
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Fundamentals of Corporate Finance

ISBN: 978-0321818171

2nd Canadian edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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