Assume That the Interest Parity Condition Holds

question 6

Multiple Choice

Assume that the interest parity condition holds.Also assume that the U.S.interest rate is 6% while the U.K.interest rate is 8%.Given this information,financial markets expect the pound to

• A)depreciate by 14%.
• B)depreciate by 2%.
• C)appreciate by 2%.
• D)appreciate by 6%.
• E) appreciate by 14%.

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