Expert Q&A Done interese party Merton Co. is a US based firm has to how $125 million for one year It can horrow in the United States for in Canada for 124. It has no other Canadian doll cash flows her national business Interest rate parity holds Mere expects the Canadian dollar will depreciau that the role of depreciate will be less than the current forward discount on the Canadian dollar. The current spot for the Canadian dollaris 5.70 Compare the expected home s from the three wees below. Which strategy has the highest expected borrowing Explain you r Borowing in the United States Bowing in Canadian dollars and Canadian dollar forward could Borrowing in Canadian dollars and without covering the Canadian dollar b. Scholes Co. is a U.S. based firm that has $125 million available to lend for one year. It can lend in the United States for 10% or in Australia for 6%. It has no other Australian dollar cash flows and no other international business Interest rale parity holds Scholes expects the Australian dollar will appreciate but that the rate of appreciation will be less than the current forward premium on the Australian dollar. The current spot rate for the Australian dollar is 5.62 Compare the expected lending revenue from the three replies below. Which strategy below has the lowest expected yield? Explain your answer Landing in the United States il Lending in Australian dollars and simultaneously selling the Australian dollar forward Lending in Australian dollars without covering the Australian dollar position