If the dollar interest rate is 10 percent,the euro interest rate is 12 percent,then

Question

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If the expected dollar appreciation against the euro is 4 percent, the net return on dollar investment is the sum of interest rate (10 percent) and dollar appreciation (4 percent) which is 14 percent. On the other hand, the net return on euro investment is the sum of euro interest rate (12 percent) and the loss due to euro depreciation (4 percent) which is 8 percent. Therefore, an investor should invest only in dollars.

If the Dollar Interest Rate Is 10 Percent,the Euro Interest