Question: Using Exhibit 5.4, calculate the one-, three-, and six-month forward premium or discount for the Canadian dollar versus the U.S. dollar using American term quotations.

Using Exhibit 5.4, calculate the one-, three-, and six-month forward premium or discount for the Canadian dollar versus the U.S. dollar using American term quotations. For simplicity, assume each month has 30 days. What is the interpretation of your results?

Exhibit 5.4

Exchange Rates EXHIBIT 5.4 Currencies U.S.-dollar foreign-exchange rates in late New York trading June 2, 2010 Wed Per U

Exchange Rates EXHIBIT 5.4 Currencies U.S.-dollar foreign-exchange rates in late New York trading June 2, 2010 Wed Per US$ Country/currency in US$ Europe Wed Per USS 20.986 in US$ Czech Rep. koruna Denmark krone Country/currency .04765 .1645 1.2238 6.0790 .8171 Americas Euro area euro Argentina peso* Brazil real Canada dollar 1-mos forward 3-mos forward 6-mos forward Chile peso Colombia peso Ecuador US dollar Mexico peso* .2546 .5481 .9629 3.9277 .8169 .8163 .8157 1.2242 1-mos forward 3-mos forward 1.8245 1.2251 1.0385 1.2260 .004446 6-mos forward 1.0386 .9628 Hungary forint Norway krone Poland zloty Russia ruble Sweden krona 224.92 .9624 .9614 .001869 1.0391 .1545 .2993 6.4725 3.3411 1.0401 535.05 1966.96 31.162 .03209 .0005084 7.8003 1.1545 .1282 Switzerland franc ,1-mos forward 3-mos forward .8662 .0782 .3514 .05250 12.7828 2.846 1.1533 1.1513 1.1474 .8671 Peru new sol .8686 .8715 .6336 1.4655 Uruguay pesot Venezuela b. fuerte 19.05 4.2946 6-mos forward .232851 Turkey lira** UK pound 1-mos forward 3-mos forward 6-mos forward 1.5782 .6824 .6824 .6822 Asia-Pacific 1.4655 1.4658 1.1874 6.8298 7.7933 .8422 Australian dollar China yuan Hong Kong dollar India rupee .1464 .6821 1.4661 .1283 .02132 46.904 9217 Middle East/Africa .0001085 Indonesia rupiah Japan yen 1-mos forward 3-mos forward 6-mos forward .3770 2.6526 .1765 Bahrain dinar 92.13 .010854 5.6648 3.8565 Egypt pound* Israel shekel 92.09 .010859 .2593 91.99 .010871 .7093 .2900 1501.05 1.4099 Jordan dinar Kuwait dinar .010893 .3037 .6820 .01170 91.80 3.4477 3.2927 Malaysia ringgit New Zealand dollar Pakistan rupee Philippines peso Singapore dollar South Korea won Taiwan dollar .0006662 .2666 Lebanon pound Saudi Arabia riyal South Africa rand UAE dirham 1.4663 3.7509 85.470 7.6628 3.6724 .1305 46.490 .0215 .2723 .7118 .0008217 1.4049 1216.99 1.4659 .6822 SDRTT 32.196 .03106 .03069 .00005267 23.584 Thailand baht Vietnam dong 18988

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