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Homework answers / question archive / The spat rate betwein Canada and the U
The spat rate betwein Canada and the U.S.is Can$1.2410/${1 USD 1.2410 CAD) while the one-year forward rate is Can$1.56/$. The risk-free rate in Canada is 4.39 percent and risk-free rate in the United States is 2.64 percent. An arbitrage opportunity exists. An arbitrageur can take a ___position in the forward contract and then take the opposite position in the spot market. Note: The party agreeing to buy the underlying asset in the future assumes a long position, and the party agreeing to sell the asset in the future assumes a short position. long short
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