Andi is considering investing $1000 in Canada, where she expects an interest rate of 3 percent, or in the U.K., where the expected interest rate would be 5 percent. The current exchange rate is 0.6 /$, which could take by the end of the year any value between 0.4 and 0.7/$ with equal probability.

A. What should Andi do?

b) How does your answer change if there is a currency conversion fee of 3 percent?

c) What have you learned from this exercise?

-- for all the above questions, answer thoroughly---