The spot rate between Canada and the U.S.is Can$1.2381 = $1,while the one-year forward rate is Can$1.2379 = $1.The risk-free rate in Canada is 2.8 percent.The risk-free rate in the U.S.is 3.6 percent.How much profit can you earn on a loan of $1,000 by utilizing covered interest arbitrage?
A) -$8.14
B) -$7.83
C) -$5.36
D) $3.49
E) $6.57
Correct Answer:
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