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Assume that investors in both the U.S. and Canada require the same real annual return of 2.70%. The consensus estimate is that expected annual inflation

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Assume that investors in both the U.S. and Canada require the same real annual return of 2.70%. The consensus estimate is that expected annual inflation in the U.S.is 5.50% and is 3.50% in Canada. Assume the current spot rate is US$.7900/CADS, and that the expected inflation rates remain the same for the next three years. c. Compute the nominal interest rate per annum in both the US and Canada, assuming that the Fisher effect holds. d. What is your expected future spot U.S. dollar-Canadian Dollar exchange rate in three years from now? e. Can you infer the forward U.S. dollar-Canadian dollar exchange rate for one-year maturity? Compute it

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