Assume That the Interest Parity Holds and That the Dollar

question 64

Multiple Choice

Assume that the interest parity holds and that the dollar is expected to depreciate against the pound.Given this information,we know that

• A)U)S. and U.K. interest rates are equal.
• B)the U.S. interest rate exceeds the U.K. interest rate.
• C)the U.K. interest rate exceeds the U.S. interest rate.
• D)individuals will prefer to hold U.S. bonds because the U.S. interest rate exceeds the U.K. interest rate.
• E) none of the above

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