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this question please Anne, who is a Canadian saver, would like to invest $65,000 dollars (Canadian dollars to be precise). She is considering two options,

this question please

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Anne, who is a Canadian saver, would like to invest $65,000 dollars (Canadian dollars to be precise). She is considering two options, buying a Canadian discount bond or a Russian discount bond, and Anne would like you compare returns on both options. The world risk-free rate is 0.25%. There is no risk premium on the Canadian discount bond, and the risk premium on the Russian discount bond is 5%. The current nominal Russian-Canadian exchange rate is ecan-56 Rubbles (Rubbles per Canadian dollar). Before the pay-out next period, you expect (and of course, Anne agrees with you), Rubbles will depreciate relative to Canadian dollar, efuture=60 Rubbles (again, Rubbles per Canadian dollar). Based on your forecast, what is the expected rate of return (% yield) on each investment. For simplicity, please assume zero transaction costs and no difference in taxes (zero taxes on both options)

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