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What is the effective dollar interest rate

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Question - You observe that the current USD/CAD spot rate is $0.82/CAD and the USD/CAD one year forward rate today is $0.9/CAD. You can invest in the US at 4.2% per annum or in Canada at 8.9% per annum. What is the effective dollar interest rate from investing in the US for one year?

Reference no: EM133021318

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