The nominal (quoted) U. S. one-year interest rate is 5 percent, while the nominal one-year interest rate in Canada is 4 percent. Assume you believe in purchasing power parity. You believe the real one-year interest rate is 1 percent in the United States, and that the real one-year interest rate is 2 percent in Canada. Today the Canadian dollar spot rate is $0.83. What do you think the spot rate of the Canadian dollar will be in one year
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The nominal (quoted) U. S. one-year interest rate is 5 percent, while the nominal one-year interest...
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