If the Interest Rate Is 7 Percent on Euro-Denominated Assets

question 70

Multiple Choice

If the interest rate is 7 percent on euro-denominated assets and 5 percent on dollar-denominated assets,and if the dollar is expected to appreciate at a 4 percent rate,for Francois the Frenchman the expected rate of return on dollar-denominated assets is

• A)11 percent.
• B)9 percent.
• C)5 percent.
• D)3 percent.
• E)1 percent.

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