If the annual nominal interest rate on 5-year U.S.Government Treasury bonds is 7 percent and the annual nominal interest rate on 5-year Canadian bonds is 7.75%, what is the expected future spot rate in 5 years given that the current spot exchange rate between U.S.dollars and Canadian dollars is $0.739?
A) $0.734
B) $0.714
C) $0.765
D) $0.733
Correct Answer:
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