Suppose the spot exchange rate for the U.S. dollar is CAD$1.01 and the six-month forward rate is CAD$1.03.   a. Which is worth more, a U.S. dollar or a Canadian dollar?     multiple choice 1 U.S. dollar Canadian dollar   b. Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is CAD$3.10? (Round the answer to 2 decimal places. Omit $ sign in your response.)   Cost in U.S dollar           $   c. Is the U.S. dollar selling at a premium or a discount relative to the Canadian dollar?     multiple choice 2 Discount Premium   d. Which currency is expected to appreciate in value?     multiple choice 3 Canada dollar U.S. dollar   e. Which country do you think has higher interest rates—the United States or Canada?     multiple choice 4 U.S. Canada please do all parts

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.