Absolute purchasing power parity exists

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The camera you want to buy costs $365 in the U.S. If absolute purchasing power parity exists, the identical camera will cost _____ in Canada if the exchange rate is C$1 = $0.7527. C$274.74 C$486.25 C$484.92 C$363.67 C$483.59 The current spot rate is C$1.376 and the one-year forward rate is C$1.318. The nominal risk-free rate in Canada is 4 percent while it is 8 percent in the U.S. Using covered interest arbitrage you can earn an extra _____ profit over that which you would earn if you invested $1 in the U.S. $0.0458 $0.0058 $0.0838 $0.0780 $0.0000

Reference no: EM13951899

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