Question

In: Finance

Suppose the spot exchange rate for the Canadian dollar is Can$1.29 and the six-month forward rate...

Suppose the spot exchange rate for the Canadian dollar is Can$1.29 and the six-month forward rate is Can$1.31.

  

a.

Which is worth more, a U.S. dollar or a Canadian dollar?

  • U.S. dollar

  • Canadian dollar
b.

Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.50? (Round your answer to 2 decimal places, e.g., 32.16.)


   


c. Is the U.S. dollar selling at a premium or a discount relative to the Canadian dollar?

  • Premium

  • Discount
d. Which currency is expected to appreciate in value?

  • Canandian dollar

  • U.S. dollar
e. Which country do you think has higher interest rates—the United States or Canada?

  • United States

  • Canada

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jeff jeffy answered 2 years ago
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