Suppose the Domestic Interest Rate Is 15%, the Foreign Interest

Multiple Choice

Suppose the domestic interest rate is 15%, the foreign interest rate is 11%, and the domestic currency is expected to depreciate by 3%.What is the adjusted interest rate differential?

A) 1% in favor of the home country
B) 1% in favor of the foreign country
C) 4% in favor of the home country
D) 4% in favor of the foreign country
E) 7% in favor of the home country