​Assume That Interest Rate Parity Holds, and the Euro's Interest

Multiple Choice

​Assume that interest rate parity holds, and the euro's interest rate is 9 percent while the U.S. interest rate is 12 percent. Then the euro's interest rate increases to 11 percent while the U.S. interest rate remains the same. As a result of the increase in the interest rate on euros, the euro's forward ____ will ____ in order to maintain interest rate parity.

A) ​discount; increase
B) ​discount; decrease
C) ​premium; increase
D) ​premium; decrease