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Interest rate in US (Rh): 7% Interest rate in Canada (Rh): 5% Line of credit in US USD 10,000,000 Line of credit in Canada CAD 12,500,000 The spot rate for CAD (SO): $0.80 1-year forward rate for CAD (FR): $0.82 What is your covered rate of return from Canada (Rcf)? 9.675% 7.625% 4.390% 2.439%

Interest rate in US (Rh): 7% Interest rate in Canada (Rh): 5% Line of credit in US USD 10,000,000 Line of credit in Canada CAD 12,500,000 The spot rate for CAD (SO): $0.80 1-year forward rate for CAD (FR): $0.82 What is your covered rate of return from Canada (Rcf)? 9.675% 7.625% 4.390% 2.439%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Interest rate in US (Rh): 7% Interest rate in Canada (Rh): 5% Line of credit in US USD 10,000,000 Line of credit in Canada CAD 12,500,000 The spot rate for CAD (SO): $0.80 1-year forward rate for CAD (FR): $0.82 What is your covered rate of return from Canada (Rcf)? 9.675% 7.625% 4.390% 2.439%
Transcribed Image Text:Interest rate in US (Rh): 7% Interest rate in Canada (Rh): 5% Line of credit in US USD 10,000,000 Line of credit in Canada CAD 12,500,000 The spot rate for CAD (SO): $0.80 1-year forward rate for CAD (FR): $0.82 What is your covered rate of return from Canada (Rcf)? 9.675% 7.625% 4.390% 2.439%
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