Question: Problem 21-4 Using Spot and Forward Exchange Rates [LO1] Suppose the spot exchange rate for the Canadian dollar is Can$1.10 and the six-month forward rate

Problem 21-4 Using Spot and Forward Exchange Rates [LO1]

Suppose the spot exchange rate for the Canadian dollar is Can$1.10 and the six-month forward rate is Can$1.12.

Which is worth more, a U.S. dollar or a Canadian dollar?

U.S. dollar

Canadian dollar

Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.75? (Round your answer to 3 decimal places, e.g., 32.161.)

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