What should expected spot rate for the cad in terms of usd

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Suppose you observe that one year interest rates in the US and Canada are 13% and 10% respectively. the current spot rate is $0.76/CAD and the one-year forward the rate is $0.71/CAD. you have a $1,000,000 line of credit in the US and a CAD 1.500,000 line of credit in Canada.

Problem 1: What should the expected spot rate for the CAD in terms of USD in one year be based on the International Fisher Effect?

Reference no: EM132928844

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