The yield on a 1-year bill in the U.K.is 8%, and the present exchange rate is 1 pound = U.S.$1.60.If you expect the exchange rate to be 1 pound = U.S.$1.50 a year from now, the return a U.S.investor can expect to earn by investing in U.K.bills is
A) -6.7%.
B) 0%.
C) 8%.
D) 1.25%.
E) None of the options
Correct Answer:
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