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You own property in Canada which is a member of the NAFTA. The property is worth 7 0 0 million Canadian dollars today April 2
You own property in Canada which is a member of the NAFTA. The property is worth million Canadian dollars today April The property generates annual rents of million Canadian dollars with the next annual payment due on or about April However, you got married to Dr"Bibi" who is an expert in the Foreign Exchange Markets, and shehe STIPULATES and advises you to sell this property today and repatriate the proceeds to Oakland, California within one year period.Assume that the interest rate parity holds, that investors are risk neutral and that the real interest rate is the same in either country. You have the following information. Home Country is USA and Host Country is Canada The Current SPOT Exchange rate is: $ CAD $ The Current and Future Canadian Inflation Rate is The Rate at which your property appreciates is a The Current and Future US Inflation Rate is The oneyear Canadian Nominal Interest rate is a Suppose that you sell the property today and repatriate the CADS proceeds today, then investing the $ receipts in the US interest rate.What are the interest proceeds and what will your $ wealth be on or about April tb Suppose that you sell the property exactly on April t What will your $ wealth bec What the OPPORTUNITY COST or Translation Gain would bed What the real interest rates would be for both countries?e What the Forward Premium Forward Discount would bef Calculate and explain the Relative Purchasing Power Parity.g Calculate and explain the Fisher Effect.h Calculate and explain the International Fisherian
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