Use the information below to answer the following questions.
|
Currency per U.S. $ |
| Canada dollar |
1.2389 |
| 6-months forward |
1.2344 |
| Japan Yen |
100.4500 |
| 6-months forward |
99.9300 |
| U.K. Pound |
0.6797 |
| 6-months forward |
0.6776 |
|
Suppose interest rate parity holds, and the current risk-free rate in the United States is 3 percent per six months.
What must the six-month risk-free rate be in Canada?