What is the us dollar-canadian dollar exchange rate

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Question: Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.41 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 1.64 euros. What is the cross-rate of Swiss francs to euros?

Assume that the U.S. is the home country. Suppose 1 U.S. dollar equals 1.60 Canadian dollars in the spot market. Six-month Canadian securities have an annualized return of 6% (and thus a 6-month periodic return of 3%). Six-month U.S. securities have an annualized return of 6.5% and a 6-month periodic return of 3.25%. If interest rate parity holds, what is the U.S. dollar-Canadian dollar exchange rate in the 180-day forward market?

Reference no: EM132756154

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