Solution-What explains the difference in the nominal

What explains the difference in the nominal interest rates

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Question - 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, (1) 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? (2) According to the international Fisher effect, what explains the difference in the nominal interest rates between Canada and the U.S.?

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What explains the difference in the nominal interest rates

Reference no: EM133041066

Reference no: EM133041066

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