Question: Problem 21-4 Using Spot and Forward Exchange Rates [LO1] Suppose the spot exchange rate for the Canadian dollar is Can$1.09 and the six- month forward

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

Problem 21-4 Using Spot and Forward Exchange Rates [LO1] Suppose the spot exchange rate for the Canadian dollar is Can$1.09 and the six- month forward rate is Can$1.11. 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$3.50? (Round your answer to 3 decimal places, e.g., 32.161.) 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 ratesthe United States or Canada? a. U.S. dollar Cost in U.S. dollars c. Premium d. U.S. dollar e. Canada

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