Assume that the oneyear U.S. interest rate is 2% and the oneyear Canadian interest rate is 5%.
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Assume that the one‑year U.S. interest rate is 2% and the one‑year Canadian interest rate is 5%. If a U.S. firm invests its funds in Canada, by what percentage will the Canadian dollar have to depreciate to make its effective yield the same as the U.S. interest rate from the U.S. firm’s perspective?
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