The spot rate between Canada and the U.S. is C$1.2378 = $1, while the 1-year...
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The spot rate between Canada and the U.S. is C$1.2378 = $1, while the 1-year forward rate is C$1.2240 = $1. The risk-free rate in Canada is 3.6%. The risk-free rate in the U.S. is 4.5%. How much profit can you earn on a loan of $10,000 by utilizing covered interest arbitrage? (Please explain the calculation.)
a. $26.80 b. $21.50 c. $90.00 d. $471.50 e. $476.80
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