Problem 18.04 – Canadian dollar, U.S. dollar and PPP.

Essentials of Corporate Finance

Ross, Westerfield, and Jordan

10th Edition

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Difficulty – Medium

Determine which is more valuable, the U.S. dollar or the Canadian dollar, then if PPP holds, determine the price of beer in Canada. Finally, determine the forward premium or discount relative to the Canadian dollar and determine which country would have higher interest rates.

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