The 180-day interest rate in the United States is 12.25% per annum. The 180-day interest rate...
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The 180-day interest rate in the United States is 12.25% per annum. The 180-day interest rate in Canada is 15.25% per annum. The Canadian dollar sells spot in New York for U.S. $.8203/Can$. The Canadian dollar sells 180 days forward in New York for U.S. $.8113. a. b. Are interest rates and forward rates in equilibrium? For a transaction size of U.S. $600,000, how can an investor take advantage of the situation without taking undue risks? Ignore transaction costs and income taxes. The 180-day interest rate in the United States is 12.25% per annum. The 180-day interest rate in Canada is 15.25% per annum. The Canadian dollar sells spot in New York for U.S. $.8203/Can$. The Canadian dollar sells 180 days forward in New York for U.S. $.8113. a. b. Are interest rates and forward rates in equilibrium? For a transaction size of U.S. $600,000, how can an investor take advantage of the situation without taking undue risks? Ignore transaction costs and income taxes.
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a To determine if interest rates and forward rates are in equilibrium we can compare the interest ra... View the full answer
Related Book For
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary
Posted Date:
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