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What should the expected spot rate for the CAD

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Reference no: EM133012478

Question - 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. 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: EM133012478

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