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interest rates in US market

CAD/USD is quoted 1.2237. IF USD interest rate is 3%, CAD interest rate 4%, what is CAD/USD one year forward? And CAD/USD 3M forward?

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Since the interest rates in US market are lower than Canada market. The money will flow from US to Canada for investment. Therefore, to have interest rate parity, the CAD should ...

Solution Summary

A discussion of the forward exchange rates ensues.