Suppose That the One-Year Interest Rate in the United States

Multiple Choice

Suppose that the one-year interest rate in the United States is 6% and that the one-year interest rate in the United Kingdom is 3%. In the context of "uncovered" interest arbitrage and with other things equal, funds would tend to flow out of the United States and into the United Kingdom

A) if the British pound is expected to depreciate by 2% relative to the dollar during the coming year.
B) if the British pound is expected to depreciate by 5% relative to the dollar during the coming year.
C) if the British pound is expected to appreciate by 2% relative to the dollar during the coming year.
D) if the British pound is expected to appreciate by 5% relative to the dollar during the coming year.