The treasurer of a major Canadian firm has CDN$30 million to invest for three months. The annual interest rate in Canada is 0.21 percent per month. The interest rate in the United Kingdom is 0.57 percent per month. The spot exchange rate is £0.64, and the three-month forward rate is £0.65. Ignoring transaction costs, in which country would the treasurer, want to invest the company’s funds? Why?
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