​Assume That the U

Multiple Choice

​Assume that the U.S. interest rate is 10 percent, while the British interest rate is 15 percent. If interest rate parity exists, then:

A) ​British investors who invest in the United Kingdom will achieve the same return as U.S. investors who invest in the United States.
B) ​U.S. investors will earn a higher rate of return when using covered interest arbitrage than what they would earn in the United States.
C) ​U.S. investors will earn 15 percent whether they use covered interest arbitrage or invest in the United States.
D) ​U.S. investors will earn 10 percent whether they use covered interest arbitrage or invest in the United States.