Macroeconomics 12th Edition by Rudiger Dornbusch, Stanley Fischer ,Richard Startz

Exercise 5

Suppose you expect the pound to depreciate by 6 percent over the next year. Assume that the U.S. interest rate is 4 percent. What interest rate would be needed on pound securities, such as government bonds, for you to be willing to buy those securities with your dollars today and then sell them in a year in exchange for dollars