Current spot rate-using covered interest arbitrage

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Reference no: EM13951430

The current spot rate is C$1.379 and the one-year forward rate is C$1.319. 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.

$0.0780

$0.0473

$0.0073

$0.0853

$0.0000

Reference no: EM13951430

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