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Suppose the annual interest rates are 3 percent in USA and 7 percent in Canada. The current exchange rate is 0.75 USD per CAD.

Suppose the annual interest rates are 3 percent in USA and 7 percent in Canada. The current exchange rate is 0.75 USD per CAD. One year from now, the exchange rate is expected to change to 0.72 USD per CAD. Which of the following is true? O A. Purchasing power parity does not hold B. Interest rate parity holds 00 C. purchasing power parity holds D. Interest rate parity does not hold E. None of the above

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