1 pt Question 16 Suppose that the current exchange rate between the US dollar and the Canadian dollar is $1USD $1.23CAD, that is. $1.23 Canadian dollars are needed to purchase $1 US dollar. Moreover, the 1- year spot rates in Canada and the USA are 3.5% and 1.8%, respectively. A Canadian business has ordered $2.2 million US dollars worth of software to be delivered in one year. To own US dollars in one year, the business is choosing between the following two options: 1. Exchange Canadian dollars for US dollars and putting the proceeds into a US account for a year. 2. Enter into a Forward contract with the obligation to buy the US dollar at a Forward exchange rate $1USD - $FO,, CAD (that is, $F, Canadian dollars will be needed to purchase $1 US dollar in one year) What is the Forward price (forward exchange rate) Fo, that will make the business indifferent between the two options? $ 1.16 5121 $ 1.25 Stop sharing fecu of O PASCA poup el 5. 6 7 8