Assume that 90-day U.S. securities have a 2.9% annualized interest rate, whereas 90-day Canadian securities have a 3.2% annualized interest rate. In the spot market, 1 U.S. dollar can be exchanged for...

1. 
   
   
   Assume that 90-day U.S. securities have a 2.9% annualized interest rate, whereas 90-day Canadian securities have a 3.2% annualized interest rate. In the spot market, 1 U.S. dollar can be exchanged for 1.25 Canadian dollars.  If interest rate parity holds, what is the 90-day forward rate exchange between U.S. and Canadian dollars (in terms of Canadian dollars per U.S. dollar)?
   
   
   
   
   
   
   
   1. 
      
      
      C$ 1.1258/$1
      
   
   
   2. 
      
      
      C$ 1.2509/$1
      
   
   
   3. 
      
      
      C$ 1.3760/$1
      
   
   
   4. 
      
      
      C$ 1.5637/$1
      
   
   
   5. 
      C$ 1.6637/$1
      
   
   
   
   

2. A currency trader observes that in the spot exchange market, 1.00 U.S. dollar can be exchanged for 11.65 Mexican pesos or for 7.213 Danish krone.  What is the cross-exchange rate between the peso and the krone; that is, how many pesos would you receive for every krone exchanged?