Take advantage of the higher interest rate

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Reference no: EM132006449

Suppose that Canadian investments offer 5% interest on deposits and US investments offer 3.5% interest on deposits. Assuming that all other non-exchange rate risks are already captured in these rates, explain why a US investor will not be willing to invest in Canada to take advantage of the higher interest rate. Explain precisely by appealing to concepts and using numerical computations.

Reference no: EM132006449

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