Business
02.07.2020 16:31
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You can borrow and lend at the interest rates of 7.00% in the US and 5.00% in Canada.
You can borrow and lend at the interest rates of 7.00% in the US and 5.00% in Canada. Based on Interest Rate Parity, the forward premium for CAD should be exactly equal to: Group of answer choices 1.90% - 1.87% 1.02% 98.11%
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angieplasencia8
4,4(87 marks)
1.90%
Explanation:
Note that that CAD exchange rate would be in terms of how many US dollars can be exchanged for 1 CAD, which means that the formula for forward premium would be stated in terms of US dollars, I mean the US$ as the numerator and CAD's interest rate would be the denominator
the forward premium for CAD=((1+US interest rate)/(1+Canada interest rate))-1
the forward premium for CAD=((1+7%)/(1+5%))-1
the forward premium for CAD=1.90%
mutoni55
4,4(40 marks)
The correct answer is:
A. To get jobs in factories and corporate headquarters.
The main reason people moved to cities during the Gilded Age was to get jobs in factories and corporate headquarters.
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