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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
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---
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