What are the assumption for financial investors we must have

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Reference no: EM132012832

Suppose the interest parity condition holds. Also assume that the one-year interest rate in the US is 5% and the one-year interest rate in Canada is G%.

What does this imply about the current versus future expected exchange rate (for the US and Canadian Dollars)?

Moreover, to have interest parity condition functional, what are the assumptions for financial investors we must have? Discuss.

Reference no: EM132012832

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