Multiple Choice
Suppose the spot rate for the Canadian dollar is 1.034, the 3-month forward rate is 1.036, and the 1-year forward rate is 1.039. If no other information is available, what will be your guess about the spot rate in 1 year?
A) 1.034
B) 1.036
C) 1.039
D) 1.037
Correct Answer:
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