Suppose That One-Year Treasury Bills Yield 8 Percent in the United

Multiple Choice

Suppose that one-year treasury bills yield 8 percent in the United States and 6 percent in Japan. Investors will prefer to purchase the U.S. securities, unless they expect the dollar to __________ against the yen over the next year.

A) depreciate by less than 2 percent
B) depreciate by more than 2 percent
C) appreciate by less than 2 percent
D) appreciate by more than 2 percent