If the interest rate on a bank deposit in Canada rises and the interest rate in Japan remains the same, which of the following outcomes does interest rate parity imply, given equal risk?

Question

Answer

Holding a bank deposit in Japanese yen is less profitable.

Answer

Holding a bank deposit in Canadian dollars is less profitable.

Answer

The inflation rate is higher in Japan.

Answer

The yen is expected to appreciate against the Canadian dollar.

Answer

The yen is expected to depreciate against the Canadian dollar.

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If the interest rate on a bank deposit in Canada rises and the interest rate in ...

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