Answer options are: scenario 1: 101.9700% 1.9700% 6.9200% 0.0300%

scenario 2: 113.3000% 13.3000% 18.8000% 0.3000%

Suppose that Russell Co. is a U.S.-based MNC that is deciding whether to finance its operations (with a one-year loan) in U.S. dollars or Canadian dollars. The rate on a one-year loan in U.S. dollars is 8.00%, while the rate on a one-year loan in Canadian dollars is 3.00%. However, if Russell obtains the loan in Canadian dollars, it will need to convert U.S. dollars back to Canadian dollars to repay the loan in one year. Suppose that Russell believes that there is a probability of 50.00% that the Canadian dollar depreciates (relative to the U.S. dollar) by 1.0000% and a probability of 50.00% that the Canadian dollar appreciates (relative to the U.S. dollar) by 10.00%. Complete the third column of the table, filling in the financing loan in each scenario. Scenario Percent Change in Value of $ Probability of Scenario Effective Financing Rate for Canadian Dollar Loan 1 -1.00% 50.00% 2 10.00% 50.00%