Suppose the spot exchange rate for the Canadian dollar is C$1.22 and the six-month forward rate is C$1.27.Assuming absolute PPP holds, what is the current cost in the United States of a hamburger if the price in Canada of an equivalent burger in Canada is C$6.00?
A) $5.36
B) $5.15
C) $4.92
D) $4.99
E) $4.23
Correct Answer:
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