
If the interest rate is 13 percent on euro deposits and 15 percent on dollar deposits,and if the euro is expected to appreciate at a 4 percent rate relative to the dollar,then
A) euro deposits have a lower expected return than dollar deposits.
B) the expected return on euro deposits in terms of dollars is 9 percent.
C) the expected return on dollar deposits in terms of euros is 19 percent.
D) both A and B of the above will occur.
E) none of the above will occur.
Correct Answer:
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