Suppose U.S.interest rates are presently 4.54 percent on one-year U.S.T-bills.Suppose that the one-year forward exchange rate is quoted at US$1 = C$1.0698 and that the interest rate on one-year T-bills in Canada is 4.325 percent.What should the spot exchange rate be?
A) 1.0622
B) 1.0676
C) 1.0720
D) 1.0764
Correct Answer:
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