The current US Dollar/Canadian Dollar (C$) spot exchange rate is 0. If you invested one dollar for three months in the domestic riskless asset you…
The current US Dollar/Canadian Dollar (C$) spot exchange rate is 0.5685. If you invested one dollar for three months in the domestic riskless asset you would earn 1.0101, and if you invested one C$ for three months in a Canadian riskless asset you would earn 1.0113 C$. A corporation wants a three month forward contract to buy 1 million C$ at the spot exchange rate of 0.54 USD/C$. Find the contract value.
