Suppose That One-Year Treasury Bills Yield 5 Percent in the United

Multiple Choice

Suppose that one-year Treasury bills yield 5 percent in the United States and 6 percent in France. Investors will prefer the U.S. securities if they expect the dollar to __________ against the euro over the next year.

A) depreciate by less than 1 percent
B) depreciate by more than 1 percent
C) appreciate by less than 1 percent
D) appreciate by more than 1 percent