Answer:
Nike would use the ask rate to obtain Canadian Dollars (CAD) for settling its foreign payable. The ask rate is the price at which banks or foreign exchange dealers are willing to sell the currency. Other rates like bid, spot, and forward rates serve different purposes in currency transactions.
Step-by-step explanation:
When Nike needs to obtain Canadian Dollars (CAD) to settle a foreign payable, the appropriate exchange rate to use would be the ask rate. This is the rate at which banks or foreign exchange dealers will sell foreign currency, in this case, CAD. The bid rate is the rate at which they would buy the currency; the spot rate is the rate for transactions that are settled immediately (usually within two business days), and the forward rate is used for transactions that will be settled at a future date.
The fluctuations in exchange rates significantly affect international trade, as companies have to convert profits made in foreign currencies into their domestic currency. This process involves the foreign exchange market, where currencies are traded and where the rates are determined based on supply and demand.