Given the spot rate, the forward rate, and the U.S. interest rate, what is the equilibrium U.K. interest rate? 3. Assume you are a U.S. investor with $1,000,000. Spot rate of Canadian dollar 90-day forward rate of Canadian dollar 90-day Canadian interest rate 90-day U.S. interest rate = US$0.80/C$ = US$0.79/C$ = 4% = 2.5%

a) What will you get if you invest in the US? What would be the yield to the investor?

b) What will you get if you invest in the Canada? What would be the yield to the investor?

c) Where will you invest?