Suppose the spot exchange rate for the Canadian dollar is Can$1.19 and the six-month forward rate is Can$1.16. Assuming absolute PPP holds, what is the current cost in the United States of a beer if the price in Canada is Can$2.95?
A) $2.48
B) $2.54
C) $2.95
D) $3.42
E) $3.51
Correct Answer:
Verified
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