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  3. answer options are: from top to bottom: 6.9200% 0.

Answer options are: From top to bottom: 6.9200% 0.0800% 1.9700% 106.9200% second line: 118.8000% 0.8000%...

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Finance

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Answer options are: From top to bottom: 6.9200% 0.0800% 1.9700% 106.9200%

second line: 118.8000% 0.8000% 18.8000% 13.3000%

Suppose that Russell Co. is a U.S.-based MNC that is deciding whether to invest excess funds in a one-year deposit in either U.S. dollars or Canadian dollars. The rate on a one-year deposit in U.S. dollars is 3.00%, while the rate on a one-year deposit in Canadian dollars is 8.00%. If Russell invests in the deposit in Canadian dollars, it will convert the Canadian dollars back to U.S. dollars when the deposit matures in one year. Suppose that Russell believes that there is a probability of 50.00% that the Canadian dollar depreciates (relative to the U.S. dollar) by 1.0000% and a probability of 50.00% that the Canadian dollar appreciates (relative to the U.S. dollar) by 10.00%. Complete the third column of the table, filling in the effective yield in each scenario. Scenario Effective Yield for Canadian Dollar Deposit Percent Change in Value of C$ Probability of Scenario 1 -1.00% 50.00% 2 10.00% 50.00%

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