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Question
A multinational firm can borrow 5 million Canadian dollars from a Canadian bank at 9 percent for one year and the same in U.S. dollars at a Detroit bank at 8 percent. With a current C$/$ exchange rate of $1.345, what one-year forward contract rate would make the borrower indifferent between the two loans?a. 1.345
b. 1.324
c. 1.357
d. 1.362
Answer
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