Suppose That One-Year Treasury Bills Yield 4 Percent in the United

Multiple Choice

Suppose that one-year Treasury bills yield 4 percent in the United States and 5 percent in Germany. Investors will be indifferent between them if they expect the dollar over the next year to

A) depreciate against the euro by approximately 1 percent.
B) appreciate against the euro by approximately 1 percent.
C) depreciate against the euro by exactly 20 percent.
D) appreciate against the euro by exactly 20 percent.