Question: CA. 4. Using Spot and Forward Exchange Rates Suppose the spot exchange rate for the Canadian dollar is Can$1.12 and the six-month forward rate is

CA. 4. Using Spot and Forward Exchange Rates Suppose the spot exchange rate for the Canadian dollar is Can$1.12 and the six-month forward rate is Can$1.17. a. Which is worth more, a U.S. dollar or a Canadian dollar? b. Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.49? Why might the beer actually sell at a different price in the United States? C. Is the U.S. dollar selling at a premium or a discount relative to the Canadian dollar? d. Which currency is expected to appreciate in value? e. Which country do you think has higher interest rates-the United States or Canada? Explain

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