About the current versus future expected exchange rate

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Reference no: EM13831864

A. Suppose the interest parity condition holds and that the domestic interest rate is greater than the foreign interest rate. What does this imply about the current versus future expected exchange rate? Explain.

B. Suppose the one-year nominal interest rate is 2% in the United States and 5% in Canada. Should you hold Canadian bonds or U.S bonds? Explain.

Reference no: EM13831864

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