2 Suppose that as the money manager of a US firm you face the following situation:

r$ rC$ S(C$/ask$) S(C$/bid$) F1/2(C$/ask$) F1/2(C$/bid$)

4.20% 6.80% 1.3850 1.3830 1.4000 1.3960 rB$

9.0%

rI$

8.0%

rB C$ 10.5%

rI C$ 9.5%

S(C$/ask$) 1.2400 S(C$/bid$) 1.2350 F1(C$/ask$) 1.2600 F1(C$/bid$) 1.2550 Here rB$
and rI$
r are the 1-year interest rates at which you can respectively borrow and invest in US dollars, and rB C$ and rI C$ are the 1-year borrowing and investing interest rates in Canadian dollars.
a If you had funds to invest for 1 year, in which currency would you invest?
b If you wished to borrow for 1 year, in which currency would you borrow?