Suppose the interest rate in Canada is 4% while it is 3% in the U.S. The indirect spot rate is C$1.02. What is the indirect 1-year forward rate?
A) C$1.0299
B) C$1.0608
C) C$1.0200
D)C$1.0302

Name: Suppose the interest rate in Canada is 4% while it is 3% in the U.S. The indirect spot rate is C$1.02. What is the indirect 1-year forward rate? A) C$1.0299 B) C$1.0608 C) C$1.0200 D)C$1.0302
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Quizplus · Accepted Answer

1-year forward rate = C$1.02 × (1.04/1.03) = C$1.0299

Suppose the Interest Rate in Canada Is 4% While It