2. On January 26, 2000, the nominal interest rate paid ona three-month federal government Treasury bill was 5.340% in the United States and 5.034% in Canada. At those interest rates, international bond traders were indifferent between holding Canadian as opposed to U.S. Treasury bills. - Did the financial market expect the Canada-US. exchange rate to appreciate or depreciate?

b. On that date, one Canadian dollar could be pur~ chased for 0,69046 U.S. dollars. What did the market expect the exchange rate to be in three months? . Three months later, on April 26, 2000, when the ‘Treasury bills matured, one Canadian dollar could be purchased for 0.67613 U.S. dollars. Had a Canadian saver purchased the U.S. government ‘Treasury bill back on January 26, what rate of return would he or she have earned?