If the dollar interest rate is 10 percent, the euro interest rate is 6
If the dollar interest rate is 10 percent, the euro interest rate is 6 percent, then
A) an investor should invest only in dollars if the expected dollar depreciation against the euro is 4 percent.
B) an investor should invest only in euros if the expected dollar depreciation against the euro is 4 percent.
C) an investor should be indifferent between dollars and euros if the expected dollar depreciation against the euro is 4 percent.
D) an investor should invest only in dollars.
E) an investor should invest only in euros.
ANSWER
C
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