If the interest rate in the U.S. is i$ = 5 percent for the next year and interest rate in the U.K. is i£ = 8 percent for the next year, uncovered IRP suggests that
A) the pound is expected to depreciate against the dollar by about 3 percent.
B) the pound is expected to appreciate against the dollar by about 3 percent.
C) the dollar is expected to appreciate against the pound by about 3 percent.
D) both a and c
Correct Answer:
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