a C3. Suppose a Canadian resident wants to purchase a $100,000 asset. This citizen is in- terested in investing in either the government bond from the United States of America or the government bond from France. Both investments last two years. Before making the investment, the Canadian investor collected the information for several countries: Country Amount of currency Annual interest rate U.S.A 110 3% France 100 2% Japan 12,000 5% Canada 147 4% a. Given that the investor is interested in only two bonds and given its following expected nominal exchange rates: Country Expected nominal exchange rate in two years U.S.A 0.719 France 0.625 Japan 93.75 Canada 1.00 c. Suppose that the cost of a coffee in France is 1 euro and that the same coffee costs $1.50 in Canada. Calculate the real exchange rate. What can you say about its value? d. Assume that the purchasing power parity hypothesis holds. What would be the real exchange rate? a C3. Suppose a Canadian resident wants to purchase a $100,000 asset. This citizen is in- terested in investing in either the government bond from the United States of America or the government bond from France. Both investments last two years. Before making the investment, the Canadian investor collected the information for several countries: Country Amount of currency Annual interest rate U.S.A 110 3% France 100 2% Japan 12,000 5% Canada 147 4% a. Given that the investor is interested in only two bonds and given its following expected nominal exchange rates: Country Expected nominal exchange rate in two years U.S.A 0.719 France 0.625 Japan 93.75 Canada 1.00 c. Suppose that the cost of a coffee in France is 1 euro and that the same coffee costs $1.50 in Canada. Calculate the real exchange rate. What can you say about its value? d. Assume that the purchasing power parity hypothesis holds. What would be the real exchange rate