A Canadian investor is considering the purchase of U.K. securities. The current exchange rate is Can$1.46 per pound. Assume that the price level of a typical consumption basket in Canada is 1.46 times the price level of a typical consumption basket in the United Kingdom.

Calculate the real exchange rate.

One year later, price levels in Canada have risen 2 percent, while price levels in the United Kingdom have risen 4 percent. The new exchange rate is Can$1.4308 per pound. What is the new real exchange rate?

Did the Canadian investor experience a change in the real exchange rate?