If one year U.S.nominal interest rates are 4 percent, one year Canadian nominal interest rates are 7.5 percent, and the current spot exchange rate, S0, is $0.587, then the expected spot rate in one year will be:

Name: If one year U.S.nominal interest rates are 4 percent, one year Canadian nominal interest rates are 7.5 percent, and the current spot exchange rate, S0, is $0.587, then the expected spot rate in one year will be:
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Quizplus · Accepted Answer

S₁/$0.587 = 1.04/1.075
S₁ = $0.568

If One Year U